I don't think physiology has much to do with changes in average game length.
The "less free time" argument seems like a non-starter in particular. Games nowadays tend to be even longer than their predecessors and many of the most commercially successful titles are enormous times sinks. Franchises like The Elder Scrolls, Grand Theft Auto, Final Fantasy, The Legend of Zelda, Assassin's Creed, and Mass Effect prove that there exists a large market within the mainstream for games that have long, engrossing (well...to some people; not likely the denizens of Noble Codexia) single player components. Many of these feature "main stories" that take up a significant amount of total playtime, often in excess of 25 hours...a big chunk of time, and beyond what a lot of pundits (amateur or professional) claim the all-important "casual" gamer can stomach. I think the market has proven them wrong.
And I'm not exactly sure where reflexive skill fits in either. Modern action games are much longer than their predecessors and the return to reflexes are at least as high, if not higher. Most old-school action titles (mainly action platformers) tended to have much smaller movesets than their "descendants" do (see Castlevania versus Castlevania: Lords of Shadow or the original Ninja Gaiden trilogy versus Itagaki's reboot) and far less of a return to reflexes than newer action games. In most old-school action titles, player characters tend to have very long attack/movement animations, and are often locked into them, whereas new-school action titles have extremely fast animations and are usually built around players canceling out of them as necessary to evade/block oncoming enemy attacks.
The shift in demographics that has probably most affected gaming is the rise of people unable to accept harsher fail states and games that don't explicitly point them in the direction of the end. It's more psychological rather than physiological, and I'd argue it's made games longer, on average, rather than shorter.
The first type of shift is pretty easy to explain as it is well-worn intellectual territory. Everyone knows about brutally difficult arcade or console titles that needed to be cleared in one-sitting and in a limited number of lies/tries. They were short from start to finish, but players were not expected to make it to the finish on their first plays, likely repeating levels over and over again, racking up a high total playtime. This is in contrast to contemporary design with lots of checkpoints/saves to restore from, to promote a flow of gameplay that doesn't repeat levels and is only interrupted by difficulty spikes the player will (eventually) overcome; a lot of folks, even hardcore ones, hate replaying mastered content in order to progress to new stuff. An old-school player may have put in the same 8 hours to clear Contra (sans Konami code) as a modern gamer might to beat Vanquish (not on God Hard). A not too dissimilar argument could be made with old adventure games, that often had fail states, some of which were tucked away to even punish all but the most crafty save-scummer; it was expected you might not clear the game your first outing (and plenty of goofy/fun failure screens were designed because of this).
The second one is probably most pertinent to the cRPG genre, as they arewere the type of game to rack up the most hours by having players wander around, trying to puzzle out what exactly just to do in order to solve the game. Often, the player's quest was vague, and there was no real sense of direction, leaving the player to wander about investigating everywhere and everything in search of what to do. It's not hard to imagine trying all sorts of different things, and in the process accruing a heapload of playtime, to progress in the game before stumbling upon the necessary action to continue or win.
It's this sort of design that led to cRPG playtimes quoted at "100+ hours" or something similarly ludicrous, not based on meaningful hours of engagement, but because the player was fumbling around in the dark. It's a style of design that wasn't universally loved then, and whose adherents are quickly dwindling in number nowdays*. It takes not only a disciplined mind to delay gratification and enjoy these titles, but additionally a mind still mystified by the wonders of a new medium to endure some obscurantist game design. Exploring a vast virtual world is fun as a greenhorn, but as a gamer becomes more experienced, more jaded, they're no longer going to see something like old Ultimas, Realms of Arkania, or Wizardry 7 as a great journey, but a tedious scavenger hunt. The more acquainted one becomes with design conventions, the more they look at things in terms of progression flows, if->then statements, scripting, triggers, etc. instead of jaunting around a fantastic place. Less "what can I do in this game?" and more "What the hell does the dev want me to do to progress? I'm sick of fighting the same damn bandits/wolves/Raubritters over and over again?" And those weaned on easier games, but still games that follow all the same conventions, will likely never appreciate this sort of design, already being "initiated" and conscious of the underlying nature of games. It's like that thing Nietzsche was talking about, yo.
That's why modern cRPGs almost undoubtedly have, what amount to, massive flashing signals of "THIS PROGRESSES THE MAIN QUEST" readily available. Exploration focused games do this as well, just look at Skyrim, GTA, New Vegas, or what-have-you. Where one wants to go may be uncertain, but where one has to go is always obvious. You can still rack up a lot of playtime doing side-quests, but there's never "wasted" time.
I can sort of understand this design decision. Many old-school games had downright obtuse triggers to progress in the gameworld, and many had core gameplay mechanics ill-suited to fleshing out wild-goose-chases. Nobody minds waiting a few missions in X-Com to get a good shot at an alien captain/commander, because the systems are solid and stand up well in repeated play. Even if you aren't making progress, you're having fun. Now fighting enemies in Ultima or RoA on the other hand...well, yeah. And I don't think "just do make better combat/gameplay lolololol" is necessarily the credited solution; most systems will probably buckle under significant repetitions else require a ton of content to keep them fresh. It seems as though it would be hard to make a game that makes getting lost/confused fun without an unrealistic need for unique content.
So, TL;DFR version: Psychological changes, not physiological changes, are the big demographic shifters, but it's hard to say whether or not they made games longer or shorter as it depends of the genre/style.
Fuck my ass, that's a lot of wordswordswords.
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