The most common and most likely answer to this crossword clue is the 5 plus 8 letter word SPACE INVADERS
I've seen this crossword clue in The Guardian
S
P
A
C
E
I
N
V
A
D
E
R
S
Buddy explains!
The straight part
We know that "People standing too close/video game" is the straight/definition part of the clue. The straight part is often a synonym or definition, in this case people standing too close/video game = space invaders.The cryptic/wordplay part
In cryptic crossword there's often an wordplay/cryptic part as well.This part involves a more complex hint, such as an anagram, homophone, hidden word, etc.
Sadly, We don't have an explanation for this specific crossword clue yet.