Any ideas for a better term? I agree, "games" restricts it to rule/competition-based titles similar to sports or traditional games (board, card, ...)—interactive digital entertainment is a very fitting but terribly unwieldy description. And you might say it excludes works that don't primarily want to entertain ("serious games"). I have pondered this question while working on a database project, but still settled for "games", because it's so wonderfully concise and most people will know immediately what you're on about.
When arguing about people bing too narrow-minded about what "games" are, I compare to printed works. There are fictional novels, historical novels, cartoons, newspapers... and we don't throw them all in one pot just because they're all printed on paper. We're confusing the work with the medium. I don't review a newspaper as being a poor novel. But that is exactly what so many players and even professional critics are doing when reviewing "games" according to their very narrow ideas of what a game is supposed/allowed to be. But we have skill-based games that are similar to traditional games, interactive narratives more similar to books or films, experimental art games that are more like an interactive painting or sculpture, puzzle games, persistent online worlds, satire games, educational titles... it's a bit disheartening to see some titles put down because they don't fit into the general idea of how a game is "supposed" to work. A succession of levels, and end battle, shooting/driving/jumping mechanics, or whatever. A lot of which might be good ideas in many cases, but definitely not for every game. It's the designer's intention for what the game should be that's the deciding factor. I'd hate to think that this narrow-mindedness is in part responsible for the mainstream's reluctance to produce anything that isn't an FPS/RPG hybrid in a high fantasy or science-fiction setting.
Sorry for rant, over now.
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