I don't get all this 'Japanese game industry is falling behind the West' talk. The following are all very high profile IPs which are Japanese:
Mario
Zelda
Pokemon
Dragon Quest
Monster Hunter
PES/Winning Eleven
Mario Kart
Final Fantasy
Gran Turismo
Metal Gear Solid
Wii...
Nintendogs
Brain Training/Brain Age
Sonic
Super Smash Bros
This would dwarf a list of Western games. Hell, this gen Nintendo has made the best selling game of all time. I would even go as far as saying that Nintendo alone are ahead of the West in game quality, sales and design. The fact of the matter is that Japan still dominates the industry, not to the same extent it did, but it still does. Nintendo on their own are a gargantuan force to be reckoned with.
