Videogames do need color spaces once you want to do any advanced enough lighting, it's jus that the only ones you want are sRGB or linear (floating point) so it can often be assumed by context.
S3TC, BC7, and ASTC are all lossy compressions so they are really not comparable.
A lot of people don't want to play games that look bad - I'd assume that this is going to be a particular issue when a game goes for photo-realistic graphics, only to end with people with orange skin colour on lots of monitors...
S3TC, BC7, and ASTC are all lossy compressions so they are really not comparable.