Children especially are extremely tolerant of complete garbage (I have similar concerns with animation) but I think targeting older audiences, respecting players by avoiding typical player-hostile bullshit (ads, in-game purchases, time gates, etc.) and really putting in the effort to make something special will still attract players.
It's going to be very rough for anyone trying to make simple arcade/flash/mobile style games. People will probably be able to vibe-code those games themselves well enough, but games with a well crafted story, amazing art and music, and satisfying gameplay will still offer unique experiences that you won't be able to just prompt your way into creating.
AI has the potential to give gamers something to play with for a while, but eventually people will get tired of poorly made AI reiterations of games they've already played and they'll want something new and actually creative. AI games aren't going to kill that demand for the same reasons AI won't be the end of books or movies. Making something that's really good takes talent and creativity and AI isn't capable of that. Most people generally aren't either. Even talented and creative people aren't interchangeable. If A Song of Ice and Fire is never finished I can ask AI to write the ending for me, but it's not going to be satisfying. Nothing stops me from writing the end for myself right now, and I can even make anything I want happen, customize the story and text for my exact preferences but it still wouldn't stop me from wanting to read whatever GRRM finally manages to release.