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Ok... 2 different topics here.

First, the reason why Japanese teams dont pump out more games is because they use a less efficient working structure. They had and some still have the habit that when you make a new game, you also make a new engine from the ground up. Western devs completely skip that step for the most part and use a licensed engine or have a single engine for the whole company.

The issue of pumping out sequals is different. From a business point of view it makes perfect sense. But, it makes little sense as a strategic decision.
It will create IP fatigue and will funnel most of the resources into an IP wich is a walking time-bomb. A less one-direction view of the company will let you realise that in the long term, its best to foster several IP's to lean on than a single one until exhaustion.

Imagine Ubi-soft. If Assasins suddenly loses popularity and sales plumet to below a million... what does Ubi have left? That dance game? Splinter Cell died off, the divison will probably not be a huge sucess, and definitly not the crew or Rayman. Will watch dogs sell more than 2 millions? Can it be sustained?
Ubi soft is one example of this problem. When AC dies, their revenue dies with them and that bubble will burst. Activision would be in the same boat when CoD dies out. They still got Blizzard, but what else do they got from the Activision side? Spiderman games? Not exactly big sucesses.

Those two companies are walking time bombs. Ubi atually tries to do something on the side with games like Watch Dogs because they have a long time CEO ahead of the company. But the likes of Activision is a type of company that is used to gain fame. CEO's in the US hop between companies frequently. While they are there they make whatever they can to have big profits, even if at the cost of long term viability (What do they care? They will be gone and in another big company by the time things go down where they can repeat the same), wich comes at the cost of development teams and studios as soon as their games are complete and they dont think the next one will make a huge profit in an exponetial rate.

I went a bit off-track, but the point is: Yes, doing yearly installments is risky and creates IP fatigue or death. No, doing 3 installments a gen is not a terrible move. A 2-3 year cycle is actually acceptable.