Some of the most critically acclaimed games, as well as highest selling games, have stories.
He's not saying games don't have stories, of course they do, he's saying that some game designers get distracted from making good mechanics, which I agree, is a huge mistake. Mechanics is the core of the medium, and shouldn't be put second on the list.
Valve gets that. Their attention and talent put into storytelling and art direction is top-notch, yet that has never distracted them from making sure their mechanics are excellent.