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Interesting discussion you guys have going here. It's funny that Kojima is only now seeing this (when did he ever say this before?!), when some (most notably, but not exclusively, Nintendo) have been publically pointing this out since at least 2005. Was it the sales of his magnus opus that opened his eyes?

Of course, Kojima still picked a bad time to say this. I don't see the Japanese gaming market as really being all that much in trouble. The Wii and most especially the DS are making sure that's not the case (for now).

What Kojima fails to realize is that the Japanese gaming market is as healthy as it's ever been; it's just evolved a different set of rules and tastes. The same old stuff that's aimed at young males doesn't cut it there anymore (the fact that there are fewer and fewer young males probably has something to do with that). Games like Metal Gear, or even Mario Galaxy just don't have the same pull they used to. Not to say they're irrelevant, but where once those titles were the bread and butter of the industry, they've been overtaken by portable games and stuff like Wii Fit.

The few gaming companies that saw the writing on the wall are still doing quite well in Japan. The rest...not so much.

Of course, Kojima may have been referring to the nebulous "mindshare." Even then, though, he'd be wrong. Plenty of Japanese developers still have plenty of pull throughout the world. Capcom's as big as it's ever been, the dinosaur that is Square-Enix proves that inertia can indeed get you far, and Nintendo....well, we all know about Nintendo.

Perhaps though he's looking at the rising competition in the West from Western developers. If that's the case, why is he surprised? The West was relatively barren on the gaming front for years after Atari's crash, with few Western companies having the resources or expertise of their Japanese counterparts. But where there's money to be made, such a vacuum rarely lasts long.

Long story short: I don't get it. Are we examining the same gaming market? I suspect not...