I don't think the Tokyo Game Show, especially in a time of economic recession, is an accurate measurement of how their games industry in Japan is doing. For the size of the country they are releasing/working on a decent number of quality games. One such game that will be out here in about two weeks is demon's souls(just an example). I think the reason for Inafune's statement was pretty clear after the his background was made clear. He prefers western games and development over development in Japan. What he has said is his opinion and he is entitled to it, but that doesn't make it true.
Disclaimer: that last bit was meant in good humor.
harhol said:Well the industry in the West has been all but finished as a creative force for almost a decade, so....
[HEADING=1]SCRIBBLENAUTS[/HEADING]

Yes, that is a small man riding a dinosaur while chasing down some zombies, what of it?