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Playstation home consoles in Japan have been contributing less and less to Sony's overall total. Peaked with PS2, PS3 will end ~10 million units which will put it ~10% of Sony's worldwide sales. 10% in a lot of areas is not that much.

What Japan inc needs to do is start to foster their main brands, games and genres to wider audience outside Japan, Take that risk so they can garner higher sales from Western markets. That seems like the no brainer thing to do.