Console video gaming? Maybe. The best days are arguably behind it.
Otherwise, people still do want to play games... just on other platforms. PC, mobile, social, etc. Video games in general are just fine. Digital sales and delivery are probably fine, too, given what we've seen from earnings reports.
Numbers look bad, but there are factors to consider. What came out in April that could fairly or favorably compare with Mortal Kombat or Portal 2? I don't think anyone should have expected Kinect Star Wars, Prototype 2, or The Witcher 2 to move 750,000+ copies.
Hardware is facing saturation, more for the X360. As Microsoft and Sony have decided to extend this console generation by another 12-18 months, negative YOY comparisons should be expectations-- not surprises. Price cuts are bandages, not cures.