there's two questions here:
1) is GAMING dying?
2) is CONSOLE GAMING dying?
1. no. people continue to want to play games. it will only grow as current gamers grow older and have kids who become new gamers.
2. no. while PC gaming will continue to have its niche market, especially in areas where keyboard and mouse have dynamic advantages (especially MMO and RTS games), console gaming makes modern games accessible to the masses who cannot (through lack of knowledge or lack of money) continually upgrade their PC's to keep up. Consoles give a consistent platform for several years where upgrading is not necessary, and games will "just work".
Sure during recession all forms of entertainment will suffer cuts, but gaming is far from being alone here.