Roughly 11,500 industry layoffs since late 2008

[cAPSLOCK]

Mummelmann said:
Again, everyone seems to base everything entirely on choosing the "wrong" platforms to develop for and completely ignore the fact that we've had a second depression and recession that brought entire nations to their knees and even rendered some bankrupt, killed half the world's largest banks, several big car manufacturers, punctured the real estate market and generally made thousands upon thousands of companies go under and probably cost several million their jobs.
When viewed in context, the gaming industry has done quite well for itself compared to many other industries and many of the affected ones were in dire straits long before this generation started.

The woes of the world cannot solely be blamed on evil, shiny graphics.

Of course the industry isn't recession proof, the 1930s film industry proved no entertainment medium is recession proof. Something to the tune of 1/2 of the movie theaters shut down, and right around the time when sound was a new thing (a big technological jump just before a crash). Granted today is nothing near the level of the Great Depression, but like you said, the entertainment industry seems to do better than most.

At least part of the blame does rest on "evil, shiny graphics." Most of the video game industry (including Nintendo) isn't Microsoft and Sony--they can't sink billions of dollars into debt while other arms of their company pick up the slack. The industry as a whole wasn't financially ready for the leap to HD. There was something like 10-15% HD penetration (and what % of that % are gamers?) by 2006, and to make matters worse the cost to produce a game has gone through the roof.

http://www.vgchartz.com/forum/thread.php?id=37077

This thread is a pretty good one on the financial problems HD causes. That's the problem, though, it's already an economic strain in difficult economic times. Things weren't exactly peachy here in the US for quite a few years prior to the crash, the financial system just publicly caught up with the rest of the problems. 2001-2002 "9/11 Recession" was fairly substantial, 2005 saw a massive downturn in the housing market. Not to mention a slow and steady collapse of the middle class here since the early 1980s that accelerated in the last decade. 

The death of the computer gaming industry around the end of 2001 was something like a canary in a coal mine.

So I agree with a lot of what you're saying in spirit, I'm just putting a higher % of blame on HD than you.  In my opinion it was the 2 biggest bullies on the block pushing the whole industry in a direction it wasn't ready for.