There is a pretty obvious solution to the steep decline in modern games. Its the same solution that was found to over priced, proprietary, commerical operating systems.
We need an open source gaming system. Its probably the only escape from eternal damnation to over priced, poorly designed, crap games.
Some critical issues need to addressed up front for it to work.
For starters you need to settle on an open source gaming engine. Torque3D would be one possibility, people here could probably name others. It needs to be capable, open source and multi platform, with as few licensing restrictions as possible. You need high caliber game developers, like Carmack to emraced it and work on it, with someone like Linus holding it together.
You need to develop a small number of core games based on the essential archetypes, FPS, MMORPG, Space battle/trading, racing.
You need to create councils for each game selected from game developers and excellent players who set rules, direction, maintain order and hold the game economy together.
As always if a game/council fails to satisfy their constituencey a solution is a fork but you want to ACTIVELY discourage forking when it leads primarily to fragmentation and wasted resources. You want as much wood behind one arrow as possible.
Each game needs to actively support and leverage mods and user developed content. In fact that will be the primary source of content.
The core games need to be designed for extreme longevity, its the content that needs to constantly changing and growing.
Councils need to design intelligent tournament systems and leader boards that actually put the most skilled players at the top, where they belong, not the grinders, scammers and cheats.
I'm a long time gamer who no longer plays games, because the games I loved the most died at the hands of corporate greed and stupidity. In particular they died because decisions were made by executives who were for the most part not gamers and made decisions that were all wrong.
If I could, I would probably still be playing the original EQ, the original WoW and Battlefield 2, Karkand Infantry only.
Battlefield 2, Karkand Infantry only was, in my mind the pinnacle of PVP. If you had evenly matched teams, with evenly matched gear, fighting a battle decided by 1 point there was no better adrenaline rush and it never got old. The map never changed, the rules seldom changed, the thing that constantly changed was the people playing it, their skills, their tactics and strategy. Developing huge maps like PS3 where you can never find an even fight, or in game purchases that allow the fools with the most money to win, developing massively too dense graphics, that are way to expensive to develop, require to much graphics power to run and add no FUN to the game, and adding too many gimicky weapons and gear that cause nothing but unbalanced matches, are just some examples.
If I could have kept the original EQ or WoW and just added a never ended series of new dungeons, quests gear and battlegrounds I would probably still be playing them. The first rule is you NEVER raise the level cap, because as soon as you do the game turns in to a pointless treadmill. New dungeons, gear and PVP is all a game needs to stay fresh.
I'd still be playing BF2 if there were any servers left that didn't suck.