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Legend11 said:

The videogame industry is growing far quicker outside of Japan than it is inside so I can't imagine it being beneficial for them not to try to appeal to Western gamers.  Also it's pretty much a given that next generation it's likely that all three consoles will be HD.  So what exactly are you suggesting?  That Japanese third-parties make niche SD Japanese games that sell a few hundred thousand at best?  If they would have followed that course they would be sheep to the slaughter next generation when they would be competing against lean Western third-parties that have survived a survival of the fittest situation with games that have engines in their third or fourth generation.

 

Videogame industry growth outside of Japan is mainly due to Nintendo, so it won't be beneficial to any of those devs as the games you're talking about aren't on Nintendo consoles.

Also, it seems like the devs of Persona games and Disgaea games this gen (who still make SD games) are far less sheep to the slaughter than other devs that crashed and burned.