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Shadow1980 said:

See the part from my last post that I bolded? The PS2 essentially carried its whole generation, and it had very strong legs. Meanwhile, the seventh generation was the first in Japan that didn't have a system with a commanding majority; the Wii and PS3 were like the SNES and PS3 in America in terms of market share. The Wii was the better-selling system but it had weaker legs, while the PS3 didn't sell as well but has had stronger legs. Not just the protracted nature of the last generation, but also how the Wii and PS3 sold over time, gave us the combined hardware sales curve we saw. It's hardly a portent. If the eighth generation does end up being significantly less than the seventh (certainly a possibility; if the Wii U sells only 5 million units over its whole life, the PS4 will have to sell 17.4 million units by March 2020 for combined Nintendo + Sony sales to keep pace with last generation), then those who predicted that outcome will have been right, but for the wrong reasons. Most assume that the Japanese market has shown a clear decline and thus any decline occuring the eighth generation is part of said trend. But in actuality if you ignore Sega (which was always niche in Japan), the hardware market has been effectively flat, ergo no appreciable downward trend in generation-over-generation hardware sales from the fifth to the seventh.

I'd question that "effectively flat".  We've got 30m exactly for 6th gen systems in Japan; vs. 24.33m for the 7th gen systems.  Granted, PS3 still has some life left in it at least until the end of 2014 judging by the release schedule; but I question whether it'll be able to make up a ~ 5.5m gap with the other two dead in the water at this point.

I think the analogies you raised as well (PS2 did well out of the gate and well with legs vs. Wii did well out of the gate and terrible with legs; PS3 did terrible out of the gate but good with legs) cover why people - including myself - are worried about the decline in Japan.  Like you've pointed out, a decline can be expected in the gap between generations.  But presumably going into the 7th you had a system that was still selling well (PS2) and a system that was storming out of the door (Wii).  Going into the 8th, we have a system that is still doing... something (PS3) and no systems storming out of the door.  We're basically pinning all hopes of a healthy industry on "well, both of these consoles will have later-in-life-legs".  I don't really know if either of them will to be honest (but if I were to use history to pick one, it'd obviously be PS4).  

And just perhaps, that's why there's more posts looking for doom than there would otherwise be, but I think that's a valid reason to be doing it.  2014 would be the year I'd be looking for major uptick in the Japanese market with both the home consoles with any hope of gaining traction out and one of them having spent 2 holiday seasons in 15 or so months on there.  Right now, we're looking at hopeful minor uptick of Mario Kart does something for the WiiU and PS4 doesn't crater completely in weekly sales; and I wouldn't say that was the sign of a healthy market.