I'm not keen on mincing words on this one. H.P Lovecraft was a racist and before you go making an argument for separating the art from the artist, let's be clear on another point: so are his stories. They encompass other problematic elements too, of course - misogyny, homophobia. Right down to their core, right down to the very themes that recur throughout his works, you'll find the hateful perspective he had of the world: the ignorance of someone who viewed anything unlike himself with revulsion. While he drew inspiration from works predating him, what Lovecraft gave to the genre of cosmic horror was his hate.
Which is now video games' problem. For decades video games have been regurgitating the themes, plots and aesthetics of his stories with not one ounce of scrutiny. The half-breed monsters that embody the very essence of Lovecraft's revulsion, the troubled white male heroes that contain his arrogance and his gross simplification of mental illness are recreated in video games with no subversion, no critical thinking. In doing so they are breathing life, again and again, into Lovecraft's hate.
It's time to let go of Lovecraft. No more tentacled multi-eyed monstrosities, no foggy fishing towns or ancient aliens posing as gods. These are jokes and the remnants of a poisonous world view. Let's move on. Because let's remember, the things people say they love about Lovecraft's work? The existential horror? The sense of helplessness and unknowable horrors? Guess what, they don't belong to him. They existed before him (Lovecraft himself drew inspiration from the works of Robert Chambers) and they're gonna be around long after.