My son's 17 so let me look through some of his old PS2 games... Kingdom Hearts, Ratchet & Clank, Jak & Daxter, Rayman, Tak - I think those all epitomize the type of game you are referencing, you just stopped playing that type of game because you grew out of them. Also, if you'd tried to play those games there would likely be plenty of peer pressure to keep you away, teenage boys are good at peer pressure like that.
Still, speaking to unalone's broader point, maybe he just shouldn't have purchased an Xbox and stuck with one of the other consoles. Those games do exist.
I think the other reason why that change occurred is that the first generation of gamers grew up, had disposable income and were a huge potential market. Xbox was marketed specifically at that group and has been highly successful, but it was expanding the gamer market - it didn't do that by destroying the other genres. This isn't a zero-sum situation.
The games on the XBox, and even more so on the XBox360, have felt like a much narrower nich, heavily aimed at the "Rated M" audience... The PS3 has been a little (but only a little) broader. Nintendo emphasizes another niche but it has definitely been marginalized.
I agree that many of these games migrated from the PC (or expanded to) to the XBox platform, but what's missing, for me, are the alternatives, to the point where I don't plan to buy another XBox. (Not sure I'll buy another PSn, either -- will have to see more than came with this generation.)
Halo Call of Duty Battlefield Skyrim Assassin's Creed Et cetera...
LittleBigPlanet, for example, sold more on the PS3 than multiple Call of Duty editions, GTA IV and others.
And lets not forget mobile games, where Angry Birds rules.
But I think you a very valid question of if (or when) total computer game playtime will be (already is) so dominated by mobile and browser-based games that PCs and consoles are the actual niches.
If you look at all the major studios that have been wading into mobile and social, it's pretty clear the industry has been thinking about this for a long time now.
The submitted story sounds like someone working in a place where they shouldn't be, and their laments are other people's celebrations.