I agree. Though because of the growth of the industry, these spots where actual cutting edge work is happening are insanely competitive, and I would bet that many of the programmers (not all of course) who worked on the cool stuff 20 years ago would not make the cut for the cutting edge today, or are simply not interested in the particular niche of that edge.
How much of it is actual competitiveness and how much of it is the artificial barriers people put in the form of technical interviews?
There's a big gap between software craftsmanship and the algorithmic trivia interview expectations nowadays, and it seems to keep widening.
Working on the cutting edge implies some sort of combination of greater talents and ability to work harder than others (hence increased competition), which means that the artificial barrier is a mere pittance.
The people interested in doing cutting edge work will find a way to be there no matter what. The vast majority of people overestimate themselves.
I think it might be possible to say that relative to the entire industry the space for novel or interesting work is shrinking – possibly. But I don't think that actually means there's less interesting stuff to work on. If anything, the spaces for that are growing – maybe more routine work is growing faster, but I can't really say. I'd wager that the majority of software for its entire history has been pretty boring.