This one I had to stop and think about for a bit. This isn't like your last video where I immediately, emphatically agree with you--that is not to say I necessarily disagree with you, Jim, only perhaps that it lacks clarity.
In a sense, it feels too broad and generalizing; examples are given, but they are insufficient to inform us of your world view on this matter. You could say that this is largely exacerbated by the possibility that gaming media use the term "Innovation" as a sort of misnomer.
It's easy to mistake "Innovation" for "Novelty", for example. A game that uses existing mechanics with little iteration for the purpose of storytelling has to work against a potential hit to novelty; a gamer who's exposed to this content might ask themselves "Well, this feels like game A, if I wanted to play game A I'd play game A", which may colour their perspective of the experience. Conversely, a game like Mirror's Edge is -extremely- novel, regardless of its flaws; it's aesthetic and mechanics are somewhat striking and leave an impression on you. You can safely say there's no game like Mirror's Edge on the market.
Gaming, by its very nature, is iterative, so you can see a sort of push to keep moving forward and to avoid stagnation. The market has been very worried about the latter, specifically, though the over-saturation of the shooter genre is a little more complicated an issue and it really isn't the only example of this happening. Really, the Modern Warfare franchise is to shooters as WoW is to MMOs--so immensely popular that many game developers try to leech off the market, often very poorly. Nobody really talks about the stagnation of the MMO market--though I guess it's worse for shooters because a shooter is easier to develop and easier for the public to ingest on the whole. But I digress.
I guess this particular topic just demands a lot of articulation; a lot more observation on a granular level to see where this goes wrong, is what I'm getting on about.