People definitely want it. I can say I want to see it happen. Also people don't know to want what they don't know exists.

There just hasn't been the Edison light-bulb/Watt's steam engine/Apple iPhone moment yet. I'm not even sure generative AI is capable of it yet but I see the potential there. While not all dynamic games are "not fun" (lotta people really like Rimworld) that kind of content tends to feel flat, like the never-ending quests in Skyrim. But I think it's easy to squint and see how those shallow Skyrim quests could become far more interesting with a system that was capable of basically writing a story as you play.

IMHO It's only a matter of time before someone gets it right.