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badgenome said:

I think that when Microsoft decided to move into the console business they brought a lot of formerly PC-centric western developers along for the ride. Partly out of necessity, because they had no first party to speak of, and partly because it made sense to target western gamers with games aimed at western sensibilities.

The Japanese had simply owned consoles up until that point for rather obvious reasons, and so didn't really know how to react to this sudden and intense  competition on their home turf. For the most part they decided to turn inward, and with the Japanese market becoming increasingly focused on handhelds, they began focusing their efforts there.

Those who did try to compete with western developers decided to do by copying western games... poorly, and in a way that bespeaks a deep-seated insecurity. Whereas they used to just make the games they wanted to make, they were now trying to make games that they didn't necessarily like or even understand but which they thought/hoped a foreign market would like.

Exactly, the PC devs have always been ahead of the console devs. When MS brought them over to fill their ranks the first generation of the Xbox was just a taste of things to come. We've all seen how things turned out with the 360.