I've been a dev in the AAA industry for almost 15 years now. Every single contract I have ever signed had this clause in it, and it's never kept me from working. They don't actually sue you, and for those that it did happen, the contract was thrown out as being too broad.
The people this actually affects are big names who have these insanely lucrative contracts, who have the money to defend it in court.
I don't think any company has ever used this to retain talent; maybe executives or directors.