How do I extract individual frames while taking video input from a webcam?

You just need to create a VideoDevice System object (say vidobj) and replace vid with vidobj :

% Construct a VideoDevice System object associated with the Winvideo adaptor with device ID of 1.
vidobj = imaq.VideoDevice('winvideo', 1);           
    
while true                     % The program will run as long as the webcam is on.
    pause(0.0001);
    frame =  step(vidobj);
    frameNo = frameNo+1;