Yes the genre is still important. Just not exceedingly dominant as it was in previous generations. This is due to a lot of factors the emergence of new genres, the advancements in other genres, and the expansion of superior Western developers in to the role playing sphere.
The latter is the real problem for all Japanese developers not just those developing role playing games. The market has tasted the fruits of nonlinear world design, better narrative, and freedom of choice. Unfortunately Japan has been slow to come around to this fundamental shift. Perhaps its the corporate culture in Japan being too bound to tradition and convention.
Whatever the reason Western developers are now the cutting edge in role playing games. Pioneering concepts like dialog trees, player alignments, open world navigation, real time combat, complex crafting systems, deeper narrative, complex character leveling, complex character design, and a plethora of other features that are becoming standard.
Often in contrast role playing games out of Japan almost seem quaint. Fortunately some developers in Japan do seem to be taking the tentative steps towards being main stream. There is still some distance to go, but once they start to marry their imaginative ideas into open worlds with freedom of character design, and some more mature narratives. They should see a corresponding increase in gamer interest.
I am not saying the JRPGs I have played this generation were not good games, but if you were to corner me. Force me to decide between Mass Effect, and one of them. I would have to say Mass Effect the world concept is always the more fulfilling.
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