To some extent, you're right. Point taken, there is a glut of game engineers. However, your comment about people being virtually unemployable outside the game industry rings hollow.
In the course of my career, there have been many people from a variety of backgrounds that became full fledged software engineers. One was a truck driver who became a top Java coder at the company I used to work for.
And the game engineer has a step up on that guy, since he actually understands how to code. He just needs to understand the way the web works.