It only got depressing when Real Arcade's philosophy got into the picture. Iconic graphics work in casual games, what they're alluding to is a lack of return on 3d graphics. Clever plots that have to do with the mechanic are the core competetive advantage against cloners and the market's rabble.

It's not really that depressing. Unless you think the video game business overall is depressing. This latest is really no different than game development has been since the days of pong. Some games seek to raise the bar in terms of graphics and audio, others in terms of gameplay, others in terms of both. The casual game world today is very similar to the arcade game business in the late 80's/early 90's. The keys are being entertaining and addictive. Lots of ways to do that. 2D, 3D whatever. Some games require 3D to be effective. Others don't.

I think this is just another sign of the expansion of the videogame market. As more people (and demographics) turn to gaming as a pastime, companies will correspondingly step-up their investment in the market.

The only down side would be if these new casual games with high production value squeeze out the lower budget ones (which can take more risks and engender innovation). But I'm hopeful that that wont be the case. There should be plenty of market to go around, and if anything this will continue to attract new casual gamers.

Ultimately, the integration of videogames into ordinary people's lives—in most any fashion—is good for educational games too. Try to imagine Maslow's Hierarchy of Needs applied to videogames. Educational videogames would have to sit near the top (can anyone think of what would go on top of them?), and building the base would offer more opportunity for their development.

That's my take, at least.

I think there's probably a distinction you have to make between games made for profit and those made for other reasons. Innovation in the for-profit world represents risk. Generally, the higher the risk, the higher the gain. This is what drives attempts at innovative games in the profit world. Budgets are assigned accordingly. Most innovations will not succeed but at the same time, any company would love to be the creators of the next Tetris or Pac Man.