Overall the video game industry is dying
The industry isn't dying; it's just facing many of the same problems that the movie industry faced in the late '60s through the early '80s.
The problem is slightly different.
The problem with the games industry is that quantity has outstripped quality and that major publishers believe that massive marketing campaigns and paid for reviews will make up for a games blandness, bad gameplay or lack of content. It's not just Madden/NBA sports games, there's a new COD every year with minimal changes just to make people buy the new one (sports games at least have the excuse that teams and players change each year). Publishers are afraid to try new ideas, marketing budgets have outstripped production budgets, deadlines are more important than releasing a working product and this is to say nothing of using DLC to fleece the consumer by releasing half the game and selling the rest piecemeal.
It's the same problem Hollywood is facing now. Too many sequels and recycling of old ideas. Too much emphasis on cash cows, not enough experimentation or evolution.
Without a radical shift from the major publishers the games industry is doomed... but gaming isn't, eampires will fall but gaming will live on. Already in the PC world, small and indie publishers are showing the big boys how to make a great game and make money (not treating your customers like dirty thieving criminals helps a lot, in the age of bit torrent, the good will of the community is the best copy protection you can get).