I agree with most of what you posted except for this.
2012 saw the release of a great list of games that have proven the industry is not dead:
The Walking Dead, Journey, Dishonored, Mark of the Ninja, Far Cry 3, XCOM: EU, Hotline Miami, Trials Evolution, Torchlight 2, FTL, Fez, Sleeping Dogs, ME3, GW2.
There are plenty of ways the industry can thrive without the "Jason Statham" throwaways or COD spinoffs. Maybe the EA/Activision/Ubisoft "version" of the industry will die, and to that I say good riddance.
Yeah, I understood it as the AAA industry, I don't think he means games will die off as a form of entertainment.