I think it’s more apt to say that the ease of obtaining pirated/downloaded music is killing the industry, more than any other particular group of products. On the one hand, yeah, kids are wasting their money on other things now, but that has almost always been the case. Even if perhaps the average teenager spends more on games than ten years ago, there were still plenty of other things they might have purchased instead of CDs – does anyone remember the trading card craze? (Pokemon, Yu-gi-oh, Magic, etc.) That, along with the fact that given the economy kids today don’t even really have as much disposable income anyway. Also consider that, say, downloadable music is pretty much only possible with a broadband internet connection, which costs more money than no internet or dialup, which was the pre-downloadable-music option. So in a sense, you could blame increasingly fast internet connections for the music industry’s diminishing profit levels.

I guess, I don’t believe that video games are anywhere near the only culprit or even necessarily the main one, and I don’t really like it when things are generalized. At the same time, I definitely see that point, and it’s an interesting way of looking at things, but not without logical flaws.