Microsoft ruined gaming because they messed the balance between consoles and PC, erasing the strengths and idiosyncratic nature of both. Before XBOX, it was clear as hell that consoles were Japanese dominated and PCs western dominated; every one with its own strengths, deep, complex and engrossing games in the case of the PC, joyous, well designed gameplay for consoles. Of course western devs have always made games for consoles but they were subpar, and the best ones were straight ports from PC. Everybody knew its place and these two different platforms co-existed gracefully.
Microsoft then throw the ying and the yang to the trash by convincing western devs of the money making potential of "casualizing" their titles to make a bigger buck. They already had the connections and could force things eventually to turn the tide into the shit we're in. And slowly western devs started to see the profits after that and diverted from the usual philosophy of games full of depth. Microsoft also lured wary console users with some SEGA titles and other Japanese titles.
But most important was the ability of gaining the sympathy of the western journalism world. One could say that this was eventually the only possible outcome given the sheer economic power of Microsoft and the closeness of working in the "right" side of the sphere compared to those closed, arrogant and monolithical Japanese companies making consoles until then. It was a slow process of course but Halo was the first showing; an average shooter with notable AI and repetitive levels suddenly was the best game ever according to the press, and impressionable fellows not accustomed to the great FPS titles of the era followed through. Slowly we witnessed a change of discourse within the western gaming journalism that climaxed with the release of the 360; suddenly Japanese titles weren't received as glowingly, started to push a very visible agenda of Japan lagging behind in quality and "innovation" while praising the "innovation" of western titles (all of them being dumbed down versions of the titles and genres you already know, showing that these "gaming experts" don't know shit). The incestuous relationship between press and companies tightened beyond repair, western devs were winning money beyond their dreams, Japanese devs saw their influence and reputation waning and the masses were already convinced that this panorama was the way to go, throwing glowing praise to "innovative" titles such as Oblivion (people's first CRPG) and many more.
And so we came to the current state of gaming, with games being clones of each other, casualized and dumbed down, platforms without different games where the only choice to be made is one of following a certain "ecosystem", also the dishonest money making schemes and the press defending those very practices.
In one sense I compare this with the phenomenon of multiculturalism, where neither culture (the locals and the immigrants) are satisfied and defining values of each other are erased in favor of an mixed bag. Seems like you try to homogenize heterogenous cultures, in every field, you cultivate a recipe for disaster, even if it seemed like a great idea at first.
Enjoy the decline fellas.