I see. She is a control freak. She does not understand that acceptance and trust is part of love. In the long run, it is in his best interest to stand up for himself and reject her unreasonable position. Not so he can play video games, but because she will keep acting that way forever and drive him insane. If she really cares for him, she will bend and accept. And if she doesn't, she isn't worthy of his affection.
This. I've seen this happen to many of my friends. It does NOT get better. There are plenty of other women out there that will either like, or tolerate a video game habit. It sounds like the op knows this though, and has already talked to his friend (or brother if "bro" was in the literal sense) and probably won't be able to convince him to do anything. Trust me, I've been in the op's position before.
OP, you might actually want to avoid stirring the pot. You could easily turn into the scapegoat when she finds out (she probably will eventually). If your bro is as smitten with her as you say he is, he'll probably take her side. It'll be ugly and awkward all around. Avoid the shitstorm if possible. If not, godspeed.
I haven't been able to ask her if me and my brother (yes, literal brother) can play video games, since I'm quite afraid I'll worsen his situation. Like you said, she's a control freak, and the reason why my brother usually accepts her requests is that he stupidly told her some family secrets, which of course I will not expound on any further. She constantly blackmails him emotionally, but I dunno, he's still infatuated with her. Quite a confusing dilemma really.
Also, my mother has gotten into arguments with her a few times, and like you said, he aligned himself with her, instead of trying to justify his actions.
What really makes me angry about her is that whatever you try to keep secret, she'll dig it up, and use it as blackmail material. Generally, I constantly cuss and swear when talking about her, and I don't even cuss.
Finally, I think he usually sides with her because of the "Rich People = Your Argument is Invalid" thing. We're not very rich, and her family runs a industrial company, where they supply materials to other companies.
That's all there is to say for now.