What a strange, strange set of quotes.
I agree with him that the market isn't dead, but "on its last legs" would be appropriate.
"More development in Japan now than we have in quite a while" suggests that they're not developing as much as they did for 360 launch (otherwise he'd have said "ever") and, like Ethomaz says, I don't think they've developed anything in Japan for a long, long time so he could be talking about any amount of titles from small to large.
I don't think calling the market "critical" at this point holds much weight either. Their actions towards Japan do not demonstrate any kind of belief that it's a particularly important market (and honestly, they'd be right to think that).
I'm interested to see what they've got in store for it, but I think the XB1 - much like the 3DS; Vita; WiiU & PS4 before it - will suffer from having long droughts where no games are launching and that'll ultimately stunt the sales in Japan more than anything else. Unlike those other consoles, however, I'm not sure MS has the clout in Japan to get the smaller developers on board to rectify that later in its life (heck, it took Vita more than a year and WiiU still hasn't managed it after a year).
