For the past couple of years we have not seen many games at all that fall under the rhythm genre, the only really example of the rhythm genre I can think of right now from recent years is the Rocksmith games but even then they act as more of teaching tool then an actual rhythm game or at least that is how I feel about it anyway.
Game development studio Harmonix has said their thoughts on what happened to the rhythm genre, ordinarily people seek to blame Activision for the fall of the rhythm genre which mostly comes down to their yearly release of games in the Hero series between 2006 -2011.
Harmonix originally developed the Guitar Hero games and feels that Activision is partially responsible but it isn't all the game publishers doing.
Harmonix co-founder Alex Rigopulos wrote in a Reddit AMA held earlier today:
I think there’s probably some truth to the notion that Activision “over-published” Guitar Hero. But I wouldn’t agree that the decline of the genre was “entirely the fault of Activision”. Reality is always more complicated than this. For example, it didn’t help that GH and RB were the most expensive video games on the market during a brutal recession. I also don’t think that either GH or RB delivered enough (or the right kind of) evolution of the experience in the years that followed the initial releases–something we hope to address at some point in the next outing.
[M]usic games need to evolve just like every aspect of pop culture. The band game boom was followed by a dance game boom, which will be followed by some other manifestation of music games–hopefully some of the new stuff Harmonix is working on! Music is a permanent aspect of the human experience, and so is gameplay. It’s Harmonix’s job to figure out new ways for music and gameplay to amplify each other’s emotional power.
Hopefully the future is better for the rhythm and music genre and Harmonix will hopefully achieve this, and at least Activision isn't fully to blame for the downfall.
Source: Nintendo Everything