Fair use is 100% a thing.
The issue in this medium is that it often includes monetary gain and is viewed as 'offensive content', which in law-speak basically means, "this looks like our product, and thus could be harmful to our reputation or representation.". So, say a little girl sees Cinderella on a game, she downloads it and sees a bunch of Disney princesses being fucked. That company suddenly becomes liable for 'damages' (short for a money-hungry family looking for a few hundred grand in a settlement.). Even if they don't get sued over it, their reputation takes a hit. It goes far deeper than that, but the point remains the same. A porn game is damaging to the glistening reputation of Disney, which would inherently break one of the 'four rules' of parody/fair use laws.
Without fair use, you don't get Weird Al. Without fair use, you don't get Shaun of The Dead. Without fair use, you don't see tutorials on how to draw a certain character or how to play a certain song. The fair use argument only works under the condition that works are transformative. Book/Music Reviews are allowed to use lines/quotes word for word as it is a critical work and thus transformative. Same goes for things like parody music (licensing is a different story) and tutorials. Parodying art is an inherently broken argument, though. Artists can cry and cry, and they'll usually win. Only because there's often no defined line for what defines 'fair use' in the case of parody works. It works judge by judge (and often by how much their palms were greased prior). They know that parodies take some amount of work to comically ridicule a genre or work of fiction, but how much is too much? That's what makes copyright and fair use laws such a dirty gray area to work through. Absolutely everything is vague, and it's done entirely on purpose.
But court? That isn't the reason it never happens. Especially in the case of a game, it'll very much likely never get that far. Unless the dev/artist really believes it falls under fair use (which it likely won't, seeing as porn is hardly considered 'transformative'.), most smart devs in this medium are just going to bend the knee and take the DMCA/C&D.
Edit: Why did this get facepalm'd exactly?