The games industry is now bigger than the movies industry. I think you're very wrong about this, as games are engaging in a way other consumption based media simply cannot replicate.
You could still sink a ton of time into it if you wanted do, but you could also crank out a decent amount of fun in 5-15 minutes.
Recently games seem to have been optimized to maximize play time rather than for fun density.
These days, AAA games are optimized for "reduced friction", which in practice usually means dumbing down the mechanics and the overall gameplay to remove everything that might annoy or frustrate the player. I was playing Avowed recently and the sheer amount of convenience features (e.g. the entire rest / fast travel system) was boggling.
There was so so so much trial and error in games in the 90s, with some you basically had to press different inputs to even figure out what does what. No QoL features, really poor save systems that forced you to play the same section over and over, terrible voice acting, crappy B-movie plotlines (this hasn't changed that much tbf but there are some amazingly written games too at least to somewhat counterbalance that) etc.
And then there's the age group younger than me, for whom games are not only a hobby but also a "social place to be", I doubt they'll be dropping gaming entirely easily.
> more and more people will realize games are a waste of time for them and go on to find other hobbies
This is what I'm arguing against, more and more people will realize exactly what sort of games they like and home in on that is a much more likely scenario.
And just in case your point is that games used to be more engaging and fresh, well, Indie games exist. So many games are doing many new things, or fusing existing genres into something fresh. There's a lot more variety to be had in games than most other media.