The idea that the cinema displaces fiction, in multiple ways, goes back at least to Walter Benjamin. Adorno and Horkheimer were complaining about fiction’s displacement by the “culture industry” in the 1940s — though they saw that the nineteenth-century novel began this process. … For a few — relatively speaking, a very few — fiction will always be king. But it’s impossible to imagine it having the kind of stature again that it had 150 years ago.
D.G. Myers summarizes fiction's place in the contemporary scene:
If fiction is no longer king the reason is not, as Tom Wolfe once prophesied, that something else has superseded it as “the number one genre.” There are no more genres (a concept as square as the novel). There are mashups; there are porous boundaries between high and low, popular and serious, literature and its negation; but there are no longer any distinct kinds. Indeed, there is a creeping horror of distinctions as such. If fiction is no longer king the reason is that the faith which sustained it for so long, the belief system which led writers and readers alike to defer to its supremacy, has disappeared. What has disappeared is any confidence in the power of the word.