All the first party Sony games are western. They seem completely uninterested in appealing to the Japanese market. No wonder the Vita is selling horribly. Sony got lucky that Capcom made Monster Hunter for PSP..now its on 3DS.

Japan Studio stalled a lot during this generation and Polyphony are Gran Turismo machines. Third-party relationships with companies such as Level 5 are still there, but they are broadening their horizons to other franchises and other machines (namely Layton on DS).

Sony need another Japanese Studio, I would agree, or at least to work on some of their third-party relationships. Having teams like Nihon Falcom and to an extent Atlus on board is great, but there's plenty of others that they should be working on.

Because catering the japanese, in most cases (exceptions are Nintendo, Final Fantasy, Gran Turismo etc) is to cater ONLY the japanese, especially today, when japanese games are so weak in western markets.

The PSP survived in Japan purely due to 3rd party support.
At least Sony tried in the west with God of War games and stuff.

Incompetence and mismanagement! Every Japanese studio is slower than molasses on a cold day unless they are working on portable games. What does Sony have them do? Waste time on PS3 games.  Beyond that Sony has no big ips for Japan. They certainly don't make games in any of the genres that sell well there. I truly feel a complete reorganization is called for. 

Its time Sony started importing western devs to head these studios. They can improve output via workflow if nothing else. Their western studios can put out quality games on a tight schedule. On top of that I would try focus their output into games that are similar to the following genres RPGs, Platformers, Hack n Slash, Simple Sports, and Simulation games. On portables as they rule the roost in Japan anyway. 

The Japanese are stuck in last gen mode.

That's why many are sticking to handhelds and portables.

Also, Japanese developers suck and don't understand online and internet services & features.

Very few Japanese developers can actually keep up with todays gaming needs

If more Western devs couldn't keep up with today's gaming needs, I guess I'd buy and play a lot more Western games.

They lack the capability.

JP Studio, IMO, aint all that good at all. Outside of PD there isnt really anything major sales-wise.

What Sony should really do, is buy out Nomura and Kojima. Get them to build a team and work together on a new IP. Insta 10 Million seller!

Sounds like you're in the minority.

That's your choice if you wish to stay in your proverbial minority box.

The rest of the world will continue to move forwards though.

Japanese games (unless its from the big guys) arent popular in the west.

NA > Europe > Japan.

Got to cater to the people that will buy the most. Times, they are a changing.