Well, no, not quite. The PS1 brought along with it the success of western devs, from Naughty Dog to Eidos to Insomniac, all of which were massively succesful during the 5th gen. There was also Rockstar, which was pretty big in the 5th gen, and got absolutely massive in the 6th gen. but by the 6th gen, western devs dominated the market.

The fall of the japanese games industry was probably the saddest development in gaming in the 7th gen imo, so many talented people now stuck at working on mobile titles or low budget niche games cause those are either the only ones investors/publishers are willing to shell out money for or simply the only ones small studios can afford to make and live off.

Innovation needs a level of financial security and that's really what's currently missing in the japanese console industry (that or in some cases some higher-ups that aren't complete dickturds), where is that mega rich investor that just wants to pump a billion dollar into japanese console gaming when you need him? :D

That mega rich investor is off investing in more stable ventures. At this point it would be crazy to pump that kinda cash into a market that has pretty much fallen apart. It would need to be something like a cultural revolution to make console gaming popular in Japan again. No mega rich investor would be crazy enough to bet their billions on it.

I'm well aware of that, it's more a pipedream than anything else. ;)

So basically, Japanese developers make games on the PS4 because it's the current generation of console hardware. Unfortunately, the PS4 hasn't gained traction yet in the Japanese market, so to ensure sales, games are ported down to the PS3. Because they still need to justify sales of the PS4 version they developed, the game is better off being localized.

It sounds like they've been trapped by the conditions of their market. It's beneficial for someone like me who enjoys Japanese games, but I feel like this is just another step towards pushing more major developers towards the incredibly profitable, low effort world of mobile games that dominates Japan.

This. 

Sounds good!

Only three of the top ten games for PS2 were western developed.  The same can be said for PS1, only three in the top ten. Compare that to PS3 where only ONE title out of the top ten, is Japanese. Yup, that's right....one.

Good news for us then. Also, Hiska said that some retailers believe that MGS V will be the first cross-gen game to sell better on the PS4 than the PS3 and that the trend will continue. Hopefully that's true so that more people start moving on to the PS4.

This is excellent news and actually disproves something I thought to be the real reason we were getting more localised Japanese games (although perhaps it is a part of it). Sony announced the localisation directive very early in the PS4s lifecycle and sure enough we started seeing more localisations so I think it was only logical to assume this was down to Sony themselves, but to actual hear publishers and developers are taking it upon themselves too, is very refreshing. With the general trend of the PS4 being an upward one in Japan (albeit small), I can see huge sales next year, with the average rising to around 25k a week in Japan.