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A major part of the problem was developers not following the market itself.

When that problem is addressed and then fixed, you will see what the Japanese market is really capable of. A home console that will hold mainline titles in Star Ocean, Final Fantasy, Dragon Quest, Metal Gear, Resident Evil and numerous other games with a big appeal to the JP market will do great things for the industry there.

The problem with Wii, PS3 and 360 was a fractured market. We no longer have that.

Edit - How did I not see this thread is over a Year old?