Video games have been declining in innovation.
Possibly, but I don't think they aren't much less innovative as an industry than any other sector of the entertainment industry. Movies, music, etc. all are chock full of stupid titles, milked-out franchises, and then those rare gems that come around every so often. It's not any particular fault of the video game industry I don't think, just the natural existence of mass entertainment media that video games have now become a part of.