I fell in to the second group; did extensive rewrites of multiple mud engines and had a so-so gui for creation of objects on-line. Was fun but was also a different age. Used to do pacman type games in college.
I worked with a team on a tetris clone project while in college, and it was actually pretty fun. It was definitely different getting away from the usual event-driven command-line or GUI application into a cyclic game. Later on, I made a networked version of othello/reversi complete with server software. I think the fun part about that was trying to flesh out the message structure and writing the networking portion. It was in Java, so it wasn't terribly complicated, but I've actually used similar programming paradigms/concepts in other pieces of software.
I had something similar happen at my last job. I was learning VBScript, and as silly as it sounds... I wrote a scripting language in VBScript . I used a lot of the helper functions that I wrote while learning that in other scripts later on to help parse things like log files, etc. It kind feels good when you get a bit of reuse out of things .
Agreed, and that trend is inevitable as well, imo. What will suffer will be the ability to utilize higher end hardware to produce truly outstanding environments, visually and otherwise. That kind of work will go on in the commercial simulation world, but not as much for games. It's pretty amazing/saddening when you think that the primary platform competitor for the gaming PC now is really considered to be the XBox, which is what? Six years old now? Six year-old graphics hardware.
I think certain developers are starting to realize this and try and provide a better experience. id Tech 5's megatextures seems to be capable of providing a far better experience depending on your platform's capabilities, which is a good path to head down. UE4 certainly had a "pretty" demo, but I don't believe any of those fancy effects will be seen on the current crop of consoles (or the WiiU). A PC today would probably have issues performing some of them as well!
As for defense work, I looked at getting into that but the company I was looking at decided to hire all their interns instead. I guess they work cheaper than I do. I also heard from someone inside the military that with all the budget cuts that it is not as stable as it once was. Although still better than working for a gaming company.
Defense can be a mixed bag. Let me say... if you hear the term "Nunn-McCurdy" being thrown around, start looking for a new job or position within your current company. That doesn't mean your program will get canned, but it means congress noticed that the DoD has gone way over their proposed budget for your program and it's gained a lot of bad press .
As for them hiring interns, if they did that, then chances are the work would have been pretty menial and/or very low level. So unless you were just out of college, it may not have been for you anyway. Another thing you want to look for is to find a position... even an entry-level position... that requires a security clearance. Most of them don't require that you currently have one, but are capable of getting one. Chances are they won't waste the money/time on an intern getting a clearance... it simply takes
too long in most cases. Another nice thing is that an active security clearance looks great on a resume if you're applying for defense jobs.