I don't think the industry is failing but I think if we aren't careful we will risk history repeating itself. In the mid 80s atari were part responsible for a crash in the games market that affected the entire global economy.
This happened for many reasons but part of it was an abundance of shovelware and licensed movie game trash. They just assumed it would sell because of the name on the box. ET showed them they were wrong.
We see this pattern still today as big publishers haven't really learned. If we aren't careful they'll rest on their laurels too long and studios from the developing world will take their place like Japan took over the console market for near 20 years after that mainly US based disaster.
Be warned!
It wasn't just Atari. It was most video game publishers at the time that were releasing shovel ware.
I agree with you though I can see it happening again and soon too. Although I don't see it as big publishers who are making the mistakes. Rather I see it as indies who are going to cause the crash. Don't get me wrong there are some truly amazing indie titles out there but when you look at steam and the other app stores there is also a huge amount of crap and it looks like there are far too many kids trying to play in a very small paddling pool.