Have you played Donkey Kong recently? Pac-Man? Missile Command? There are two main focuses that bind these three games together: all of them originiate from the days of video game arcades, and all of them are mind-blowingly, soul-crushingly hard. The reason for this is simple, in that the arcades wanted to squeeze every quarter from players that they could, and harder games meant less players reaching the end and so more return visits. They were probably tough then, but it is extremely difficult to get very far at all in these games today. Not only that, but they were fun and addictive as well, perhaps because of their punishing aspect, and gamers would keep going back for more. Most modern games, in comparison, could be called easy, with lower penalties for mistakes, fairly forgiving gameplay and an explanation on how to excel at the game usually in reach. So what does this mean? Are we as gamers just getting bad at playing games? Are we being treated as delinquents who might eat the controller if we weren't given explicit instructions on its use? Should we start demanding more difficulty to restore our pride and our ability?
Well, not really. The economy of selling games and how they are received has changed enough that difficulty is required less. Games aren't sold on a coin-per-play model in another building any more, but rather a structure that lets you own the game in your own home. If you own a game, you don't want it to make you want to kick in a wall or spend hours on end trying to get to the end, only to die and start at the beginning again. Gamers these days want to get the complete experience of the game they spent a relatively significant amount of money on, seeing all that a game has to offer rather than mostly a kill screen. What is on offer has changed drastically as well. Games look better, sound better, run more smoothly, and can do vastly more complicated actions than games of the past could. What is more, most games have a story that is there to engage a player. Story is more prevalent in games than it has ever been, and locking a good story behind a difficulty barrier is a surefire way to make sure your game is bought by no one. Would you play Mass Effect if the Insanity difficulty was its norm? If it had, it would have died in a flaming heap the minute it hit shelves. Story is there because contemporary players expect it, and story is becoming better as the years go by. Difficulty is decreasing to allow players to see more of it.
This is not to say that modern games are completely incapable of being difficult as well as applicable to a modern audience. A recent example of this is Super Meat Boy, an "masocore" arcade game on XBLA and Steam. Like almost every modern game, there is a story, but it is wafer thin, replaced by a huge emphasis on extremely challenging platforming. More often than not, players will die a staggering amount of times on an individual level, because it is a game that thrives on being tough. The difference, though, is that there is never a game over screen, any lives, or any real consequence for death. When you die, you simply return to the start and try again. Because there is no break between the gameplay, players are put in a sort of "One more go" mindset, and this makes the gameplay incredibly addictive, and this is how it works, catering to the somewhat more impatient crowd that exists today. Similarly, Hardcore Mode in Dead Space 2, where you have only three save opportunities, works because it is an optional challenge, and doesn't throw any nasty tricks at you from outside the main game. It is a part of the game which may never been seen by some players, and is undoubtably a struggle, but the payoff for those who complete it is huge and satisfying. This is how modern difficulty must work: as a way to make players want to be challenged, rather than a way to make them cough up quarters for every continue.
Of course, there is a fine line on what is fun and difficult and what is frustrating and difficult. If a game is hard because it is cheap, its never going to be fun to play. For example, Call of Duty: World at War on Veteran difficulty is hard because dying from factors completely out of the player's control is frequent, and it is absolutely no fun when it happens. A more recent example (in terms of release date at least) is Duke Nukem Forever, which has bosses which take way too long to defeat, controls that are middling at best and often lacklustre, and health that is about as effective as having a wet towel on your face to protect against bullets. You can die because you are suddenly surrounded by shotguns from nowhere, you can die because the obvious path is in fact a pit you shouldn't jump in, you can die because you plain can't shoot guys. It's not challenging, it's just dumb and annoying. Games these days need to steer clear of using cheap deaths to mean a difficulty spike.
Ultimately, games are so different these days that if someone had tried to release Pac-Man now instead of in 1980, it may well be called a disaster of a game and would be swept to the side. As well as that, people have different opinions on games every day. Do people want to have difficult games like in the arcade era? Do players appreciate that story is a bigger focus? In the end, games are games, and people will play what they want. Challenging well-done games can be amazingly popular, but ultimately the gaming world is moving on from the difficulty of the by-gone world.