In fact, most people use the terms interchangeably, especially people who aren't computer owners - they say video games when they mean computer games. In the early days, people saw arcade games before they ever saw a computer. Naturally, when they saw a computer game, they immediately thought it was the same kind of thing translated to a computer. At Infocom, we've always tried to sell the concept of interactive text-only products. If you look at the entire marketplace and divide it up, there are arcade games, sports games, simulations, and stories.
Stories are actually a very large segment of the market - perhaps even a quarter of it right now.
Story products in general do not have fast action graphics of the sort people are used to. Certainly interactive fiction rarely has graphics at all, and even fantasy role-playing games tend to have fairly simple graphics. So the people who are attracted to the story category tend to discover that graphics and action aren't everything, and aren't necessary for enjoyable games. In fact, there are very few graphics adventures in which the graphics even play an integral part in the story or provide any information that couldn't be provided otherwise. Rather than try to make the stories more complex, the easiest thing to do is to make the product look nicer - to add bells and whistles.