Interesting article in the Guardian which talks in part about the weak launch of the PS4 (in terms of Japanese games and consumer interest) but mostly focused on the fact that the Japanese market has shrunk and the developers have aged and lost touch with the increasingly Western market.
I think smaller Japanese publishers (nods towards Atlus) will continue to do okay and maybe even improve, but the big guys who have lost the ability to do anything but a handful of big franchises (and often they do those badly) will continue to decline.
http://www.theguardian.com/technology/2014/feb/22/playstation-4-muted-japanese-launch-shows-how-industry-has-changed?fs=1&source=atom#all/14460cec8108446c
http://www.neogaf.com/forum/showthread.php?t=774110
In 2002, Japan accounted for 50% of the global video game market. By 2010, it was at 10%. If you go back to the era of PlayStation 1 and 2, you will see it was dominated by Japanese giants like Nintendo, Sony, Capcom, Konami and Namco. The biggest games were arcade conversions – the likes of Tekken, Ridge Racer and Street Fighter – but the biggest console originals came from Japanese studios too: Super Mario, Resident Evil, Final Fantasy, Metal Gear Solid... These were the games everyone was excited by. The top ten best selling games of the nineties were all developed in Japan.
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At the same time economic factors were working against the Japanese industry. An economic recession shrank the domestic market for console games, and hit publisher’s ability to compete in terms of development costs. The Dreamcast title Shenmue, an incredibly prescient, ambitiously sprawling adventure required a reported $70m to develop, almost ruining its publisher Sega – but in the West, among companies like Electronic Arts, Activision and Ubisoft, this would soon be a pretty standard budget. And on the other side of the financial spectrum, a very strong indie scene has developed in the US and Europe, often with the financial backing of larger publishers (there is a thriving indie scene developing in Japan, but it has largely been contained in hobbyist groups). It also seems easier for younger talent to rise into positions of prominence within larger developers whereas in Japan, a rigidly hierarchical management structure can keep fresh talent from blossoming.
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