Japan and the gaming industry has been a pretty angsty issue as of late.
One that's fairly multifaceted, and I don't think there's a single cause. Some things are their own fault, and some not.
Square, Enix(now of course, Square Enix), Capcom, Konami, and several other very successful companies with a great history have gone pretty downhill.
As well, gaming has been taken over by a new generation. A generation that may have at first begrudgingly accepted non-Western culture in their video games, and may have even grew to love it, my generation, after seeing how fun and refreshing it could be. Is not the same generation as the current one. In this current generation, Western companies aren't copying Japanese games like they used to. And Western companies are having more blockbusters of their own. The United States video game industry, for instance, is currently going through an "American pride" high now that they have much more staying power in the industry and have found a larger audience.
As well, retrogaming and old games are even losing so much respect it's ridiculous. I've even seen it on this site. Fans of old games are starting to become a minority. And it's certainly in part because of a newfound pride in American games and embarrassment towards Japanese games. Many companies in the West might not admit it, but there's a sort of rising "buy American" mentality on the rise. A little bit, at the very least.
Partially this is in part because video games have become even more mainstream than before. As the hobby now has a large portion of adult who don't think of video games as merely toys. Video games are rubbing up against and taking various influences from Hollywood. And the sort of Asian heritage of "old school" gaming is starting to be treated as a sort of "Mongol Yoke".
Video gaming isn't allowed to be "different enough" as a mainstream media, because of certain ways it differs from other pop cultures. And Japanese companies aren't doing good at holding up, a lot of companies are holding on to successful franchises of the past. But the current generation could care less about classic music, classic movies, or classic video games. The kids today are saying "Megaman who? God of War has boobies." The industry is going through a growing pains of a sort, and I hope normality will not win out. But in the meantime, Japanese companies need to try extra hard, and not sit on their laurels or betray their fans.
That being said, Japanese games aren't doing THAT horribly. Several video gaming outlets have their own biases. Nintendo is doing wonderful, a inconvenient truth that many in the industry try to ignore and shove under the rug. It doesn't matter if the Wii is a "casual friendly" platform, Zelda games have never been "casual games". And hardcore Nintendo fans are certain as hardcore of a crowd as any in gaming. I'm getting really tired of the Nintendo shaming propaganda.
And as others have stated, where people like Square, Enix, Capcom, Konami, and so forth, are falling. Atlus is still carrying very strong in many respects. So are many other Japanese companies on the rise. They may not be a juggernaut yet, but they're picking up steam. I have faith in them.
Ironically, though, in terms of creativity, it's the idea pushed on Japanese developers that their games are inferior that's stifling them. This notion is sending shockwaves throughout the industry and creating somewhat of an inferiority complex. Capcom is abandoning things like Megaman Legends 3 and Japanese aesthetics and gameplay in favor of Western developers making things like the DMC, because they have no esteem in Japanese culture selling outside of Japan. Part of the downfall of Square Enix and Capcom seem to be related to Westernizing. If Japanese developers are going to be afraid to make Japanese games, they're certainly going to be afraid to do anything unique. And among the very worst games they've been making, have done so to cater to the Western audience, like MindJack.
If the West keeps acting like they need to Westernize and drop Japanese aesthetics and gameplay, they're just going to keep making more atrocities like MindJack. Instead of good games.
