First off, I'm not in favor of renaming video games to something else. It's not outdated when the basis of video games has stayed the same over decades with the dozen or so genres that are categorized under the medium. I'm not a fan of Dear Esther, but I'm not going to fight tooth and nail over its "game" classification.
Rather than trying to reinvent video games, we add a new genre? How about "Narrative?" Typically games are not categorized by the narrative, but when the sole intent is to tell one, then perhaps this can be. Think about it: A genre to tell a narrative with an interactive attribute, whether that is controlling a character, camera, or the direction. Sounds like a video game still to you? Yeah, because it still is, but it takes a different direction. There are already Visual Novel games, and even something like a Dating Simulator is heavily narative based. Sure there are challenges, but I'm not going to be striving for "AAA Rank," a faster time, or other more challenge oriented attributes.
Video games have been around for a long time, but as technology and ideas evolve, why can't we add something new? Rather than going into a raging froth over the interpretation of video games, clashing with different prespectives and expectations of what each user wants out of their video game, we realize that there's not going to be a singular view or preference. Much like gamers/users have different tastes in genres, there's going to be different ideas and direction of where video games have been and where they should go.
I stand by that video games can be art. Thing is, I find video games that I interpret to be art are ones that didn't have the sole intent to become art. I think it's a horrendous mistake when your intent is to try and mimic another medium when you have to come to the realization that video games (or another) are their own. There's no "same level," especially when it comes to the differences of movies and novels. Otherwise we wouldn't have adaptations between the two and the discussions of which was better. Actually, include television in that, or you know, add video games too. We have adaptions of video games into movies, or into novels. We have television adaptions of novels and movies, and then there are novel adaptions of movies.
Oh, wait, there's also comic books. Well, we have adaptions into... I probably don't need to go on, right? Good, now maybe I can find a good Choose Your Own Adventure book. Not like those went out of style.