I'm an avid gamer, but video games are in no position to replace films. The mediums are fundamentally different. A film is a story being told. A videogame is a template to explore your own story, some more filled out than others.

If you want to merely argue that video games will win the battle for people's time I could see that. My guess is movies will be like books; maybe not the biggest kid on the block, but eternally popular. You can't say that for vaudeville.