Will Japanese based Game developers/publisher be here long?

[PAOerfulone]

Japanese publishers/developers aren't going anywhere. Your friend is right.
Square Enix does incredibly well by knowing who their target audience is. Some of their franchises are huge solely because of Japan (Dragon Quest), some because they're huge mostly in the West (Kingdom Hearts, Tomb Raider), and some franchises are huge everywhere (Final Fantasy) Three out of those Four franchises are Japanese themed, and 2 of them do just as big, if not bigger in the West than they do in Japan.
Same goes for Capcom with Street Fighter, Resident Evil, and Devil May Cry, all of which are bigger in the West than they are in Japan. Also, Monster Hunter is growing in the West as well.
Atlus is doing pretty good. Same with Sony Computer Entertainment.
And Nintendo is Nintendo.

The only Japanese companies I can think of that are fading or going down hill are SEGA and Konami. And that doesn't have so much to do with changing climate in the gaming industry, or the gaming community shifting towards Western focued IPs as it does due to incompetence and stupid decisions on their parts.