This is Google saying VR as a medium for passive consumption is dead, or at least the market isn't ready yet. There's could still be plenty of potential for interactive media like games though.
Not quite. The OP is about 3DOF content where the stereo is baked. You can't move your head around and can't tilt your head.
You can have passive content like a static or living scene that isn't interactive but where you can move your head a bit or explore, and it can be photorealistic (6DOF video, light fields, which Google is also working on).
VR has this property of being the best hardware to consume some kind of contents that don't fully take advantage of it. Like monoscopic 360° videos, stereoscopic 180° video or stereo panoramas. Not quite VR but there is no better way to consume them. I wonder if it sometimes confuse people assessment of VR potential.
Once I saw the 3DOF videos where you can actually move your head around, everything else instantly paled in comparison. I have no desire to view monoscopic video after I went to all the trouble of putting this headset on (unless it's the only way I can watch that video because I'm sitting in a crowded room or vehicle).
This really is the next-gen way to consume immersive 3D content, and if what you're doing is not 3D it is probably a niche use case.
The OP is about Google Spotlight Stories, which mostly produced non-interactive 6DoF experiences. Obviously on Daydream headsets or YouTube videos which don't support 6DoF you'd only get 3DoF, but if you download the videos on Steam 6DoF works just fine: https://store.steampowered.com/search/?term=Google%20Spotlig...
However the "interactive media" market is also way overhyped, maybe similar to 3D-TVs. When the initial excitement of the user for VR wears of it feels more like a gimmick rather than an immersive experience. I know plenty of gamers who have rarely used VR goggles stuffed away in some cupboard while going back to their plain old 1080p monitor. VR will stay a small niche even in the context of gaming.
It amazes me at how much difference there can be depending on the social circles and culture perhaps ?
On the other end of the spectrum there will be people for who movies and TV are a way to distance from reality and the last thing they want is other people interfering with their experience.
I think your view is aligned with how the movie industry sees itself, while the opposite view is materialised by how a whole swach of the viewers stopped or limited their going to cinemas, don't sit on the family couch and prefer to watch things on their iPad in their room or at home at night alone.
I would say serial TV shows can be a more social experience; I get together with friends to watch Westworld and I know the bachelor/bachelorette have big followings.