I doubt that two films were necessary to explain this story. Personally, if all films lasted four hours, I would be one step closer to a perfect world.
This saga continues by recalling the events of Puppet Master 4. The development is similar with the exception being that the puppets target the humans in this episode. This lacked in the fourth instalment.
The problem lies with the lack of budget and effort put into the realization of this series: the general animation of the puppets is shameful. Their arms move too much for no reason and we never see their legs unless they are projected against walls, after which they seem dead, obviously because the puppeteer on set can't control them anymore in that position. The success of the first three parts is due to the fact they avoided this reality by having discrete, mysterious puppets. This has been dropped in this movie and ruins their image.