2) Physical effort: Then figure skating and dancing should be in, but video games and chess should be out.
3) Both competitive and physical effort. Here figure skating etc. should be out, as well as video games.
Frankly, I can't see a way that figure skating and video games both belong in the Olympics.
Note, I LIKE figure skating. It is a lot more fun to watch than most races. Similarly it is more fun to watch than someone else playing a video game.
Personally I think tradition will win, which will keep it as a "physical effort", so figure skating stays and video games will not be allowed.