When discussing the so called "collapse" of casual gaming. Yes, it's a collapse if you compare the sales of kinect sports 2 and sports champions to the sales of Wii sports 2. Yeah there's a huge gap between those titles. There's also a huge gap between titles like Rockband blitz, and Guitar Hero or proper Rockband. Let's face it if you replaced COD with killzone it would appear the FPS market was collapsing.
Just wait until the software that made casual games popular returns. Which we really haven't seen any casual powerhouse title outside of just dance for about 3 years now.
As for kids not gaming, no duh you went from 40 million DS owners to 2 million 3DS owners. There's going to be a drop off since Nintendo has moved on from the DS software production.