I don’t like the “hardware is becoming more expensive so gaming is going to die” argument because it assumes that we need bleeding edge hardware to play games. The gaming hardware treadmill was only ever designed to make people spend more money on increasingly-diminishing gains instead of getting the most out of the hardware everyone already has.
We’ve long-since passed the point of diminishing returns on graphical performance. AAA games released today don’t look that much better than they did 5 years ago, and AAA is no longer the main driver of gameplay innovation. Many of the best games of the last few years don’t require high-performance hardware, leaning more on art, music, writing, controls, unique gameplay elements, etc.
Point being, I think that hardware becoming more expensive just means that people will opt for cheaper hardware, or hold onto their existing hardware longer, which will force developers to design games that can run on mid-range hardware. There is no reason that gaming needs ever-increasing hardware perfomance to deliver great experiences. The gaming industry is in for a rough go as they have to adapt to very different circumstances, but gaming is going to be fine.