The extreme video gaming he's referring to is called Major League Gaming (MLG). The industry has been making a shit ton of money the past few years and grows more each year. Games like Call of Duty, World of Warcraft, League of Legends, and Starcraft II all have MLG circuits. Halo used to back when Halo 3 was the big game.
Looks like X Games is just doing a Call of Duty tournament.
Does MLG belong in the X Games? Hell fucking no, but is it smart from a business and money making point of view? Hell fucking yes.