It's not dying. Japan is fine. Since the start of gaming the Japenese industry just was unproportionately big globally speaking but now as the West has catched up the Japanese market will naturally decrease a bit.
Not only has the anglo-Saxon West (USA CAN UK) become better at making games but there's so many more countries that make games now. Only 10 years ago almost no games were made in Sweden but now we're a powerhouse. And there's respectable German, Dutch, Danish and Finnish devs now. And the former Eastern Bloc has some original game developers breaking into the market in the last decade making great games such as STALKER, Mafia, The witcher, Metro 2033 and Two Worlds (Two Worlds II will rock).
Japanese share will stabilize at 30% of the market until Korea and China enters the industry for real and then it will reduce further.
