Well, this is an interesting topic and one that could potentially raise the heat!
I used to work in the games industry and let's say, I have been exposed to 1 or 2 (ahem) video games over the years, including the more extreme & controversial titles.
I also own a couple of games systems, which are partially neglected now due to other interests (reading/art etc).
Do I think video games can be harmful? - yes! After working within the industry and hearing accounts and seeing letters from video game fans, I believe that the fantasy world of gaming, for some, may cross into and effect reality. This leaves a responsibility upon the rest of us to guard the vulnerable (and stupid!).
We used to promote the Lara Croft character (amongst others) and it shocked me, time and time again, when engaging in ridiculous discussions over the telephone about the character and how real this character had become in some users minds. I am not just refering to children either; young adults were also snared by the sexual lure of Lara's silicon breasts. We continued to fashion this character to tap in to this obsessive trend amongst the fans.
The marketing team, for another video game, (in all their wisdom?) decided to use a real old-school cockney gangster as a vehicle of promotion at trade shows. The game involved setting up smuggling rings, outwitting the police, and using violence against members of the public to enforce criminal standards.
This all seemed like a big joke at the time. When working in this environment you can see that the main emphasis is money, money, money! The consequences of the game's ethics rarely played a part in any campaign discussion. The more outrageous the better to be honest with you! If the company thought they had a unique selling point that would grab media attention, then great, go for it!
... onto Demons.
I'm not absolutely sure to be honest whether playing a video game within itself can open portals to the world of spirits, but I have a feeling that for some, it may. I have read many accounts of people who have had encounters with malevolant spirits and one theory is that a vortex of negative energy may allow a spirit to earth themselves. So possibly it is the energy transmitted by the player that causes the problem, rather than the actual game theme?
Obviously this depends upon your viewpoint. If you do not believe in the spirit world, then fine, "do what thou wilt".
Putting the demons aside for a moment, I do feel that the video game industry needs to address the issue of ethics and would do well to take a look at companies like Nintendo, who tend to produce titles that have a feel-good factor and are far more family orientated.
I do not think video games are evil per-se, but like anything in this world, there is an element of moral degradation within the industry.