They cater to a specific audience that wants to hear someone else tell them what they already believe. You might hear people talk about MSNBC in the same context. Fox News tells conservatives what they want to hear and MSNBC tells liberals what they want to hear. It is a bunch of preaching to choirs.
It's funny how the guy against video games was acting hyped and immature while the guy for video games was pretty calm and collected the entire time. But in all honesty I can't really rag on Fox in this situation, for once this time they were not grossly unbalanced. As you saw they did get a video game expert on the show and they did give him plenty of time to plead his case and make his points.
I don't think the other guy was against video games per se. He was against the government spending money on the arts when they are in as much debt as they are. It could have been any type of art (music, sculpture work, paint work, etc) and he would have had a problem with it. He thinks that money could go elsewhere to create jobs. The other guy brought up a good point in that the video game industry is a huge avenue for job growth and that spending government money on that industry does stimulate job growth.
I'm not sure why you feel that debate was bad. It was done cordially, everyone acted fair with one another, both sides raised good points and, besides confusing big budget games with indie games, the moderator did a really good job. I think you may be trying to look to hard to find things to be upset about with this video. You may not like Fox News but don't pick on them when they didn't do anything wrong. There was nothing wrong with that segment.