If he spends the time in games equal to the home work and remains constant in other activities, then the percentage decrease in time of sleeping:

The time spent in playing games and in doing homework corresponds to 30° and 45° respectively.

If the time spent in playing games is equal to that spent on doing homework, then there should be an increase of 15° in the time spent in games.

If this 15 ° is obtained by decreasing the time spent in sleeping (with the other activities remaining constant), 

The percentage decrease in the time spent in sleeping = $$\ \frac{\ 15^0}{120^0}\times\ 100$$

= $$12.5^0$$

B is the correct answer.