I think it all started with:
- Microsoft focusing on Xbox , wasting billions
-Computer hardware becoming cheaper because of outsourcing to Asia, meaning less lucrative . Eg look at the successful Sierra business model of the 80s, targeting the affluent computer owners instead of the ones with C64.
One reason even the Amstrad cheap ibm clone was snubbed by the press back then for prestige reasons. Now cheap computers are the norm, leaving to prestige to Apple.
-Dominance of Nvidia and AMD in the gpu market, meaning monopoly and less innovation.
-Microsoft doing the same on Windows, after winning the OS wars of the 90s. In fact it took few years to become stable. Other systems OS were ahead of Windows years ago.
- Windows XP resetting the pc gaming landscape (no proper BC compatibility without resorting to incomplete solutions for years). This broke the connection between younger and olde users and many moved to consoles because advertising on computer gaming was reduced at that time.
-Computer games becoming streamlined and consolised, attracting new users in the short term, like in 2010s, but not good for the long term, as the innovative computer games of the 80s and 90s had a different sales model with less numbers. Influential fps games sold just the fraction of N64 Golden Eye for example.
-In general it is a totally different landscape. In many games the online social aspect outweighs the gameplay aspect
-After the arcades, which at least did not require credit cards and offered quality graphics and gameplay, companies return to gambling via mobile phone games.
To me the most important part is that back then video games were not cut from social entertainment in general, which was mostly an adult thing, dating back centuries. You had things like arcades,gambling, billiards, darts, cards, social gatherings etc, together with smoking, alcohol and other...stuff. It was not strictly a sanitised environment, glued to a monitor, no matter the variety it offers. It was far more exciting , though also more risky.