There’s still innovation to be found in the gaming scene, but it’s increasingly rare in the AAA scene.
I think a large part of this is because in the past, advances in technology forced games to be innovative.
From the 4th and 6th generations, the increase in controls and memory meant that many more types of games were possible and more complex stories were able to be told.
The 5th generation brought with it the 3rd dimension, albeit clumsily, so games had to innovate to contend with it, but there were still significant limitations and controls were still being figured out.
The 6th generation continued that trend with proper full 3D and unified controls between the consoles, so innovation was again necessary, especially with the camera and new shooting mechanics. Open world games were possible in a way they hadn’t been previously.
The 7th generation was the peak, the last time games looked or played noticeably different than the previous generation. The main innovations were with online play and DLC.
After that though, there’s not need to innovate anymore. The space has settled, the controls have settled, online play is settled, etc. It’s possible to keep putting out the same types of games since the 7th generation, they still look and play fine, and until another massive paradigm shift like 3D or online play happens, games, especially those made by AAA developers, won’t be innovative, because they don’t have to be.