It could have worked better by trying to tie it a bit more to what the AVGN episodes were supposed to be. I also think even though a lot of the effects were supposed to be intentionally B-movie-ish, they don't seem consistent enough to pull it off, especially since the actual movie doesn't really capture the tone of a B-movie at all. It's a little too self-aware for what it's going for.
It also seems like James used it as an opportunity to do every type of movie cliche/special effect he's ever wanted to try but wasn't sure if he'd get another chance to do (like working with miniatures) so it seems less like the homage he was clearly going for and more like a mismash of genres.
Without all the wacky characters, I thought the ET plot was decent and a good way to have an AVGN episode/review become a bigger adventure, it's just that the adventure part wasn't so great. I liked the effects and acting for what it was.
They were probably trying to do a little too much, especially since the crowdfunding campaign was such a success and they wanted to give the fans something big, but a leaner films would have worked better with more of the budget going into locations, crew, and actors. Have more cameos by regulars, give some in-world explanation for why the Nerd sees all these game characters but just ramp up the quality of the effects, then just plug in new characters in roles that would fit. They could have done a real interesting twist on what happens in the Nerd's life outside of the videos, but they didn't go that direction at all. Didn't he work at a video game store or something? I don't know, the character stuff didn't mesh together all that well with the plot.
It's not like James is completely awful at making films. His Board James stuff is pretty good. I could see the potential in some of his short films, he's probably just a director that works better with lean budgets and making due with what you can.