Gaming will be fine.
Indie games will thrive.
AAA studios with overblown budgets following stale trends dictated by CEOs at large companies or private equity firms that are only interested in flipping stock prices and not running a reasonable business? Yeah, they might be fucked. And good on them for going down in flames. Unfortunately a lot of developers and support staff that had no hand in the bad decisions will suffer and lose employment. That part sucks. It's inevitable though, only the strong survive.
Part of being strong is being lean, resilient and adaptable. Just like graphical progress has diminishing returns, so too do the number of people working on something. Look at Stardew Valley or Balaton. Made largely by one person. Surely if you had 100 developers, they would output 100 times as much, but that's not the case in quantity nor quality.
Limitations breed creativity. Being limited by time, money and resources (such as with indie devs) leads to innovation. Combine that with passion and indie gaming will keep thriving. Soulless corporate gaming, though, is in for a rude awakening.