I'm answering to your response to me

You are missing the point here completely. It doesn't MATTER if a market is shrinking and if the other is expanding relative to it. you can't just combine markets as 'you' see fit. Home consoles and handhelds cater to 'different' audiences. Guess who buys home consoles? People who wants them!

I repeat DIFFERENT markets. If Japanese are losing interest, that's all good. It just means 'handheld' market is expanding in Japan, nothing more nothing less. You are just running around this for some reason.

So fact of the matter is, handheld market leader in Jp = DS/ Console market leader in Jp = Wii. Losing interest in a product = shrinking market, not because they think it's the same thing

You're missing my point here... it's not even about shrinking or growing markets, it's about blurring markets.  DS fills the needs PS2 used to, it's considered the de-facto successor to PS2, and it's unquestionably been Japan's market leader this cycle.

That's the whole point, these literally aren't DIFFERENT markets anymore for the Japanese.  The handheld/console distinction in Japan at this point is an arbitrary one, this isn't like how it is in America or Europe.  You're coming at this with a completely wrong mindset, one that Japan's effectively evolved out of.  And 3DS/NGP just blur those lines even further, hell we're even getting Famitsu articles now about how with NGP, Sony doesn't even need to bother with doing PS4.  That's where Japan's at today.

Dragon Quest needs to save the Japanese console market! lol It is probably the last console game capable of selling 550k this generation in Japan.

PSP? Seriously I'm sorry... I don't wanna troll but why is it receiving the most support in Japan? The whole problem Japanese devs have been complaining about the past few years has  been the neglect of a global market, yet they are supportng the worst-selling global entity. It is just as stupid as Square Enix developing 360 exclusives in Japan. Mind you, they are making cash and sales are good in JAPAN, but their market is narrowed as a result. PSP is not relevant anywhere else. I am impressed it managed such high sales this week though.

again not sure why you are stuck in this delusion where there are no seperation of markets. It's a simple idea really. Going by your 'concept' even the WW market home console leader is DS! lol

Listen, people still buy home consoles in Japan right? Just because one item gains traction and popularity doesn't mean people see both products the 'same'. They ARE different if not we won't have anyone buying consoles in JP anymore.

and just wow DS has been considered de-facto successor to ps2? who in the hell said that? or is that also one of your own ideas?

As long as the two products 'target' different audiences, and until there is at least ONE person buying consoles weekly, there will be no 'combining' of markets. It's a simple concept in marketing and markets. Just because one product sells shit load doesn't mean it's the market leader for every product even remotely close to it. It IS about growing and shrinking markets. Both markets have 'differen't priorities they look for in gaming. The one approaching this with a rather odd approach here is you I'm sorry to say.

and btw coming to think of it. If I use your logic here then smart phones are the market leader now!!!!! Both handheld AND home consoles!!!! :P pleasssseee spare me

Versus and XII-2 won't have any problem to sell at 550k or more.

Why wouldn't they support PSP? We see week after week that those games get very solid sales and those games have found their niche in the west (and there's whole unknown dimension of psp game sales as we don't have any sales data for PSN)

Why are you applying a worldwide lens to this?  We're talking about Japan... this is exactly the problem with your viewpoint, you can't seem to help but apply a worldview to this that frankly bears no meaning.  The Japanese don't care what Americans or Europeans think about the console/handheld dynamic and apply that to their own market, so why are you?

People do still buy home consoles in Japan, but most people don't buy them for the same reasons they (largely) bought their Famicoms or PlayStation 2s. The needs previous consoles filled are largely filled by DS and PSP today.  A lot of Wii were sold to new or lapsed markets (Wii Fit, NSMB, etc), a lot of PS3s were sold to technophiles (Blu-ray, Torne, etc), but the majority of the "gaming" market, the people who had a PS2, instead this generation bought a handheld as their primary gaming platform.  

That's I think what really at issue... if you want to segregate down, then you should do it by "prime" and "supplementary" machines.  Game Boy, despite having an absolutely gigantic userbase, larger even than any PlayStation ever has by a significant degree, was never considered the prime gaming platform, or the market leader.  And there are reasons for that, in terms of what sort of needs it filled, it's capabilities, the sorts of games it had.  That continued to GBA, which usually even outsold PS2 on a weekly basis in Japan.  DS though, turned this dynamic on it's head, both by attracting new gamers and servicing established ones... and it was successful at it to such a degree it actually filled the void left by PS2 to become the dominant games platform in way GB or GBA never would've been able to.  Over time, DS literally did target the same market FC/SFC/PS1/PS2 did in Japan, it had similar priorities and similar influence.  It's the market leader in every sense of the word.

I'd also argue that (part) of the Wii problem and decline in Japan in exactly that it didn't do enough to really differentiate itself.  It very much feels redundant overall next to DS/PSP in terms of reach or audience (all home consoles do, they've effectively been replaced)... now part of that's due to DS basically eating the sort of games market that went for home consoles in the past, and part of that is also probably due to Wii not pushing hard enough to try and find new consumers to replace that.  But at the end of the day, the result's the same... most Japanese gamers simply graduated from PS2 to DS, rather than PS2 to Wii (or PS2 to PS3 for that matter).  In the Japanese psyche, it's not about handheld vs console, it's about which platform gives them what they want.  For most, PS2 gave them what they wanted, then DS gave them what they wanted.... that's why they're the market leaders.  Simple really.

Versus, XIII-2 and MGS Rising should all pass 550k imo.  Zelda SS might too, and if Wii gets a DQ remake then that's a sure million seller.

Also, calling PSP's western market "niche" is being generous.  When what's effectively MGS5 can't sell even 200k in the US on a platform, that's not niche... that's dead.  Outside Japan, PSP is a dead software market.

I would've said Inazuma Eleven Strikers would manage that, but now it's been delayed to a nebulous "summer" release, so Skyward Sword may end up releasing earlier.    

If something like Rhythm Heaven Wii comes out this spring though, that could do it.  Otherwise, yeah, I don't see any 125k Wii games until summer.

It's anything but clear cut this gen. The previous generations saw dominant market leaders, they had the most sales and got the most games, including the majority of big games of the respective generation. NES, SNES, PS1 and PS2 all share these similarities, but this trend was bucked this generation. Not only is the Wii less dominant in overall sales and marketshare, but it's also seeing worse third party support than the almost irrelevant Xbox 360.

The previous generations also had a clear distinction between home console and handheld gaming, something (as jarrod has repeatedly pointed out) that doesn't and won't hold up from the seventh generation onwards. SNES vs. GB (color vs. no color and smaller scope for games), PS1 vs. GBC (3D vs. 2D), PS2 vs. GBA (again 3D vs. 2D). The lines got blurred this gen with handhelds being capable of 3D graphics and it's obvious that the Japanese don't see home console gaming as first class entertainment and handheld gaming as second rate gaming like large parts of the West do. In general they view them as equal and if anything, handheld gaming is seen as the superior form, because you can take the system with you.

What this means is that the only justifications for home consoles in Japan at this point are:

1) Offer something that can't be done on a handheld. In previous gens home consoles by default had this advantage due to technological reasons as it wasn't possible to build affordable and long lasting portable systems that could play similar games to the home consoles of any given time. That automatical advantage is gone now. If the Wii didn't have games like Wii Sports and Wii Fit which absolutely can't be done on a handheld, then the total home console sales this gen in Japan would be much worse (and they are already bad to begin with).

2) Make big games exclusive to home consoles. That's the main reason how the PS3 got to where it is today. If sequels to all the big series of the PS2 era had launched simultaneously on PS3 and PSP, you can be sure that PS3 sales would be much worse than they are today.

If point 1 is well executed, then home consoles will have a future in Japan. Point 2 is troublesome, because publishers have to ask themselves why they should bother to keep home consoles alive with Japanese gamers being very open to playing pretty much anything on portable systems which also have the benefit of lower development costs for their games.

If the home consoles of the eighth generation fail on point 1 and third party publishers continue to shift more towards handhelds, then we will be definitely looking at a Japanese marketplace where all home consoles combined fail to sell more than 15 million units in their lifetime. They possibly won't even make 10 million should this happen.