In isolation, I agree with you -- this is what a competitive market looks like, Unity has forced the other engine makers to become more competitive. Competition is good.

In the broader picture... I'm not sure. I keep thinking about the video game crash of '83, and how market oversaturation crippled American video game makers for years. I wonder if the constant lowering of barriers to entry isn't hastening something similar. (Probably not nearly as bad, video gaming is a lot more mature as an industry right now, but still.)