Imo Video games are doing well, people are buying a lot of games and especially used games.
Its that there is they are spending way to much on games.
If they get rid of used games and go to fully digital the industry will suffer a huge revenue loss. As they will have to sell the new stuff cheaper (like DVD's vs VOD and such and cd's vs Itunes) and will be selling less as fewer people will be willing to buy a game for full price and not be able to have some flexibility with it.
The industry cannot focus on the small % of hardcore gamers who are willing to spend money like idiots because they will not be able to generate enough revenue to cover the surging production costs of games.
Also why cannot I play a game and give it to my friend to play? Especially if its a story based game like Uncharted?
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