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Looks more like stagnation than contraction of the console market to me. Here's a chart of Wii sales against the PS2:

http://vgchartz.com/hwlaunch.php?cons1=Wii&reg1=Japan&cons2=PS2&reg2=Japan&cons3=X360&reg3=Japan&weeks=156

It's pretty much keeping pace. The video game market in Japan just seems to be saturated to the point where the only place for growth is in the handheld market. Other regions have all the growth potential, so Japan is only losing ground in a relative sense.



"The worst part about these reviews is they are [subjective]--and their scores often depend on how drunk you got the media at a Street Fighter event."  — Mona Hamilton, Capcom Senior VP of Marketing
*Image indefinitely borrowed from BrainBoxLtd without his consent.