I don't have a problem with a developer/publisher deciding to focus on local gaming tastes, but this will become more and more difficult to sustain as each generation of consoles becomes more costly to develop for. I see bad times ahead for Japanese consumers who prefer Japanese-targeted titles.
Anyone remember Purple Moon? They attempted to develop games that were very girl-oriented, such as focusing on relationships, but they folded after 2 years. The problem wasn't that gamers weren't interested in developing "gaming" relationships (just ask anyone who plays the Sims or WoW), but that they did it in such a way as to specifically appeal only to a limited market.
Some games have been developed for very specific interests, such as the original Cooking Mama on DS which sold 4m copies, but a developer has to carefully gauge how broad the interest is to pull it off.
Perhaps part of the problem is that Japanese gamers' interests are starting to broaden, meaning they're more likely to purchase Western-produced titles than they were in the past.
