Here's a list of reasons why.
1. Population decrease and a shift to mobile/handheld
PC gaming is invisible in Japan and console gaming is becoming less lucrative for profits. Couple this with a shrinking population and the future isn't going to be a thriving one. PS4 releasing all around the world before Japan is already a very big sign.
It is not a stereotype but is a fact that a lot of the Japanese (how much percentage I don't know but it's big) can't read English. Western games aside from blockbusters like BF, CoD, and AC aren't big in Japan. The likes of Ori and The Blind Forest, Batman Arkham series, The Witcher series, and many more aren't in the radar of most Japanese gamers. Just look at Famitsu. The RTS and MOBA genre are nonexistent in Japan. All these lead to an ignorance to things outside of their country. What is an RTS? What does it need to be successful as a game dev in the West? Why do you think SquareEnix bought a lot of Western studios in recent years?
3. Lack of structure for a thriving indie scene
Since PC gaming isn't big in Japan, the indie scene isn't too. DD still isn't that prevalent. Steam isn't that popular. There's lack of incentives and ways for indie devs to thrive and deliver their game. The governments of Canada, Scandinavia, and other organizations for indie devs exist in the West for a thriving indie scene while in Japan there's only been summits that have occurred just recently and are in no way comparable like say to Indiecade.
4. Slow adoption to technology
It's Japan it's got to be high tech. I know but that stereotype is dead wrong. While they may be advanced in some things there are also a lot where they are very behind. Since they can't read English, they have to wait for Japanese translations of new things to come out from the West like a new version of the C++ language, DirectX 12, game engines, etc. It's no wonder why the Japanese suck at using Western game engines because they don't have much experience with them (The Evil Within using idTech 5 and other games using UE). Game schools in Japan to this day are still teaching DirectX9 (freaking old), Maya 2014 (no 2015), Wii/PS3/Xbox360 (last gen consoles), etc.