Video game bashing seems like another moral panic to me. People are spending more time playing video games than slaving away flipping burgers. So what?
As you have articulated, innovation tends to manifest when humans spend their attention on things that also further drive the demand for their attention.
The point being that the context here is significantly more gray than black / white.
The Video Game industry seems like its doing just fine without Government assistance. The Government can focus on investing in creating manufacturing hubs in the US instead.
Shortage of labor? Create a new Visa and citizenship pathway specifically for electronics engineers, while investing in US universities to expand the EE departments and scholarships related to EE.
Its all possible if the US Government wants to.
Which is why everyone capable tries to get into FAANG for AdTech. Nurturing people to think long term and to have a producer + explorer mentality will yield better results. Critical thinking with (endless) ambition is the key.
Even if the USA authorities subsidize EE study it is not certain that new grads will go into EE jobs and not into a bootcamp to respec. Get rich quick incentives like ones given by FAANG are really strong and it would take a lot to counter them. One solution, ironically, would be to do the same as China is doing. Dismantle FAANGs and the problem disappears. Smart people will flock to some other branch and maybe IT people will go to boot-camps to become EE on their own volition (free markets).