As I always say, advances in AI will generate new forms of entertainment, not video games.
In fact, there are already many people roleplaying with AIs, something that didn't exist five years ago, so we already have a new form that will become much more sophisticated when corporations start exploiting it for profit.
Within decades, if AI continues to advance, we may have lucid dream generators. You will see audio-visual content generated in real time and you will be able to interact with it like a dream.
In practice, what this will mean is that normalfags will abandon video games en masse for this new technology that is more suited to their tastes. Consider that many of them already play video games for this purpose, such as Dead Red Redemption 2, Last of Us 2, and a huge number of these "normiecore" experiences aim to put the player in a cinematic experience, and these games will disappear completely when lucid dream machines become commonplace.
Video games will once again become a niche thing for those who want challenge and gameplay, rather than those who want interaction with audio-visual content.