1. The rising development costs really hit JRPGs. The huge scope in many of these games has caused costs to sky rocket. Look at many JRPGs of this generation to see various scope cutting corners, less towns or over world maps. Instead you have static images and characters talking to one another overlaid on it. I remember when people talked about remaking SNES or PSone RPGs on the PS3 and it was stated how those games translated to modern graphics would just be prohibitively expensive. Does not surprise me the DS and PSP managed many JRPGs because development costs on those was lower and could meet demand. This has left the console centric western market under served though.
2. The rise of the WRPGs on consoles. Back in the SNES or PSone era wetsern RPGs were decidedly a PC fare. Big titles like Elder Scrolls, Fallout, Dragon Age or Mass Effect (or Baldur's Gate back then) just did not exist back then on consoles. JRPGs simply had less competition.
3. I think there was a rush and over estimation after Final Fantasy 7 of what the genre could do. So many JRPGs came over after years of getting few (and generally more of the top tier) that the market became saturated and many people got their fill and what was innovation suddenly became trite as archetypes were repeated.
4. Building on point 2 I just think the west has become more west than the old days when the market expanded. Before playing games appealed to smaller group who grew up playing Japanese games. Now someone can buy a western console (Microsoft) and could have a whole library with any Japanese games at all, this would have been unthinkable 15-20 years ago when Japan was king.
My assessment as a JRPG fan, the golden age has gone and likely be going back to SNES era where second tier JRPGs have 50/50 shot of being localized and supported by niche market that buys collectibles (think NIS or Atlus or XSeed) to justify bringing over a game that will not light up any charts.
It's a shame, but nature of the industry, plat formers and fighters went through similar things, so maybe there will be a second golden age at some point.
