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The big Christmas AAA games are making as much money as they ever have, thanks to full price preorder bonuses, DLC, season passes and in-game microtransactions. Why are you saying games releasing more frequently is the bubble bursting?

Overall development costs are actually falling right now, because PS4/X1/PC are very very similar architectures (certainly compared to PS3/360/PC), and because engines are now a commodity.

Japanese companies making AAA games is in decline, yes. Not the industry as a whole.