Although video game is not meant to be created as a passive entertainment, I think it is going that direction. With the combination of plot and amazing graphics, I don't see why a video game cannot be watched. Take for example Onlive, which allows you to stream game play of other total strangers. Or streamed Starcraft2 games. I know for a fact that a lot of my hard core gamer friends watch live stream from South Korea all the time.
From my personal experience, I used to actually play all the video games I thought was fun. However, ever since college ended, and when I have to use my time more wisely, playing a demanding video game counter intuitive as a stress relief. However, watching my roommate play video game is both entertaining and lacks the necessary attention I would need to attribute if I were playing the game. Of course, after watching my roommate play Skyrim twice might get a bit old. But then again, who watches the same TV show for over 30 hrs straight? I don't care how good mad men is, if I were to do two or three consecutive marathon of it, I would get tired of it too.