I'm not sure how reasonable it is the way the author mixes demographics to make his point. I don't see the type of person playing sims social, wanting to buy a AAA game to begin with. I think the tech arms race does matter to people. It also acts as a signal of minimum floor of quality,but the specifics I'm not sure myself. I know would definitely prefer HD in movies, tv, and videogames. I definitely prefer movie special effects to cheap television special effects.

edit: maybe it also acts a way to signal people in market full of noise (competitors?)