YES.Hahaha, to be fair, I would qualify the language of the initial thesis and give entirely different reasons as to why I feel that way.
To say that the industry "died" alongside Sega is overly alarmist, it's more that once the first-party race changed in dynamic from the former lineup of toy-oriented game design perfectionist (Nintendo), film and music industry integrated mega-conglomeration (Sony), and a technology-obsessed culture guru (Sega) to Nintendo and the Sony-Microsoft twins, the mainstream scene stopped building off eachother and creating a thriving, interesting gaming culture.
Sega and Nintendo bounced ideas off of eachother in the most fascinating ways, and through their entirely distinct approaches to rising technological capabilities and whatever inspiration motivated them that year, constantly out-did themselves and eachother. In the earliest years, Sega was geared toward the adrenaline-seeking punks in smoke-filled arcades who wanted drag-racing and fist-fights while Nintendo sought out the kind of imaginative, story-book family fun that the toy industry mined. Competition drove Sega to employ more off-the-wall imagination and for Nintendo to get in peoples' faces every once in awhile. Sega drew from the popular culture that Sony were purveyors of in their other endeavors (only VERY recently did Sony learn how to/buy up companies that could make games themselves) to the extent that many of the major hits that Sony published played off of Sega's action film and music video-inspired classics, which in turn lead to Sega's Dreamcast-era reinterpretation of the hip counter-cultural-yet-mainstream gaming that they themselves had inspired. This was great for Nintendo as well -- they backed their first-party IPs harder than ever in an attempt to make their names bonafide cultural entities in order to combat Sony, yet they were galvanized to keep moving forward with creative, off-the-wall concepts by Sega.
If I could go back to those dynamics, I would gladly do so. I'm not a Sony fan, but the way they rose the stakes inspired a lot of great creativity from the other two first-parties.
So tell me somethin':
http://www.youtube.com/watch?v=UxpvXnrNyuUWhen Sega left and Microsoft took their place, this dynamic went away entirely. Nintendo became the revolutionizers, but they just don't follow Sega's act that well when it comes to nonstop teeth-smashing creative energy. It's like comparing first-wave punk to radio pop-punk. Sony's kind of coming into their own as a hyper-outsourcing games maker, but it's just to distinguish their brand from the otherwise identical Microsoft camp. While there are certainly some great games to come out in recent memory for every console, the urgency is gone. Well, let me correct that -- there's plenty of urgency, but most of the first parties are trying to fix their problems with bureaucracy instead of inspired, synaesthetic, heart-stoppingly modern game design.
Hell, Nintendo's TRYING, but no one's willing to risk supporting their console because it doesn't hit close enough the the mark scratched out by the PlayStation and Xbox brands, which made their mark with a LOT of stuff that has NOTHING to do with game design.
So, is the game industry dead? No. But it's no longer driven primarily by modernity in game design, and that's a huge disappointment that DID begin and practically arrive as soon as the bell tolled for the Dreamcast.
I'm holding on to hope that consoles fold, the industry moves to PC distribution, third-parties reject Sony and Microsoft online distribution since it will offer no significant advantages over pre-existing services, and that hardware innovation amongst game developers will largely come through highly imaginative proprietary controllers which can control either an extremely focused or vast array of different game types. It's here that developers can pick up the Sega torch and finally run with it again before it goes out completely. Hopefully that developer will be Sega themselves, but if not, I know for a fact we still have plenty of incredibly creative developers who are itching for a chance to make their mark once they get uncaged from the awful current state of this industry.
http://www.youtube.com/watch?v=Yf1KcumOS7M