Games are not like movies or books because you actively participate in the story, to a certain degree. It's a problem for a game with a long and twisted story to integrate deep failure elements. Some game genres are based on try, fail and repeat, but for a cRPG with a complicated story it's a very bad idea, for my taste.
In BG3 I was quite annoyed about the lovely consequences of failing during Isobel's abduction. It was a huge difference to what I call "normal play" and I hated it. It is a badly scripted event anyway because it does not make any sense that the abduction could be successful if only Isobles hp were gone. But even with a better written story, the consequences of failure were too big for me. On the other hand I could live with Halsin disappearing in the void and the Shadow Curse not removed (happened in my Honour Mode playthrough), because that was not that impactful.
So I'm against big failures except they write a lot of after-failure stories with about equal gameplay possibilities and difficulty scales. And that's too much effort in my opinion. So it would be that you have to start again after big failures. I don't like such rinse and repeat games.
