Interesting article in yesterday's Nikkei Shimbun, Japan's equivalent of the Wall Street Journal. Entitled "Kuuru Jyapan no Yuuutsu" ("The Melancholy of Cool Japan"), it paints a bleak portrait of the domestic video game industry, noting that the top two video game companies worldwide (EA and Activision-Blizzard) are now foreign. Even more to the point is the domestic market's sluggish growth in spite of a near doubling of the size of the market abroad.
Once Japanese-made games ruled arcades and television screens. What happened?
One reason: the ever-declining birthrate and resulting lack of children. But another factor is more intriguing: the thirtysomethings that currently represent the core audience for games in Japan are increasingly wrapped up in their work and child-rearing duties, resulting in a drop-off of interest in games. In other words, Japan's man-children are finally growing up, and there are fewer and fewer young'uns left to take over their places.
Still, all isn't bleak. While the article cautions that the foreign popularity of first-person shooters (which Japanese makers have never particularly excelled at creating) has significantly eroded the prospects of Japanese companies abroad, it suggests that Japan-made games haven't totally lost their "cool cachet," citing the success of Metal Gear Solid 4 (the English localized version of which -- as of September -- had outsold the domestic release by 2.5 times, for a total of 4 million units sold worldwide) and the foreign-friendly offerings of companies like Square-Enix and Tecmo as rays of sunshine during this stormy period.
So there you have it. When Japanese creators put their minds to it, they can create content that is capable of competing anywhere on this planet. But it's much easier and far less risky to create an unambitious sequel or spin-off that appeals to a tiny but loyal core of die-hard local fans, or even worse, a "dating sim" that's guaranteed to sell ten or twenty thousand copies to love-starved moé aficionados, than it is to put your head into creating something that an average specimen of humanity might want to play. (See also: the entire anime industry of late.)