I agree with you only because now most games are ported to PCs and are easier and less costly to be localized which allow third parties to leverage sales outside Japan. I've seen quite often third party games breaking their own records the past years of the best selling in the franchise and this is never thanks to JP market, rather despite of JP market
The world is bigger than Japan, but Japan is still a significant gaming market, significant enough to be worth not abandoning.
Bet with Liquidlaser: I say PS5 and Xbox Series will sell more than 56 million combined by the end of 2023. (And over 130 million lifetime)