Excuse me? Video games are software by any definition I'm aware of and highly complex software at that. More than most, software engineers on AAA video games need to have an understanding of the full stack including the underlying hardware to be effective contributors.

What is the skill gap that a software engineer working in games would have moving elsewhere? The only one I think of would be domain experience in TDD and unit testing. Neither is widely practiced in game development, but they aren't universal for software development more generally either.

This is missing the fact that the vast majority of game developers are not "software engineers" While what you say is true for a large amount of software engineers in games. The vast majority of game developers are in Art, Design, Audio, QA, etc, where this does not apply.

I can't speak for all game development degrees, but at least for the one my university offers they don't have much focus on strong CS fundamentals, and offer more of a high level overview of programming, writing, animation, etc, especially focusing on combining these in existing game engines. People who graduate with these kinds of degrees would be employable as game developers, but wouldn't be strong software engineers. They could transition I'm sure, but it would take time to learn what they missed in university, and given the work hours expected of them in game development it seems free time for learning would be at a premium.