They are barely keeping up with console games. Most of their games make little money overseas except for the well known franchises. Very few Japanese gaming companies can even afford to try and make games for the PC.
There was a time when the Japanese push out great games constantly. Unfortunately, that was over a decade ago. That generation of devs either no longer work in the field or retired. Their current devs are just flat out terrible. They try to make their games into EMO virtualized worlds. Every game looks like anime. All of them add pedophile elements because that's what the Japanese market wants. Just about all them have a terrible story that doesn't make a lick of sense.
There are only a few exceptions to this. I can basically count on one hand the number of Japanese games I liked on the PS3. I already plan to skip buying a new console.