Chess has never been taught in schools has it? I can't see the correlation between literacy and chess? My Grandfather taught me and I've taught my two nephews aged 10 and 11. Who also happen to have extremely good literacy skills and their own iPads but they still enjoy chess and Monopoly and Cranium and a number of other board games plus football and scouts. Kids aren't all about online gaming.
I think every generation looks at the next generation with a 'it's not like it was in my day' attitude... chess is alive and well and maybe if each of us pass our love of chess onto a few of the next generation... we can keep it that way.
I believe that chess was one of the games that Keanu Reeves and Alex Winter played with the Grim Reaper in Bill and Ted's Bogus Journey (1991).