Yeah, hard to design FPS games where you can't move. Then again, mobile had a similar constraint - a touchscreen is a piss-poor substitute for keyboard and mouse or gamepads... And yet a massive number of games have found good approaches on this. Obviously the big difference is that phone gaming is "free" on that you already paid for the hardware. Not many people would buy a phone just for gaming.
The bigger issue seems to be game design. There are some things you just can't ever do without causing a huge chunk of people to get sick.