You're mostly correct, Riachu, and the side-effects of that can still be seen in the industry today. However, CT did not do enough. A lot of the elements that make RPGs annoying to non-RPG players were minimized or changed to something similar instead of eliminated (such as leveling up, random encounters, mindless wandering, complex battle tactics, micromanagement, etc.).

In this day and age, a properly disruptive RPG would eliminate all of the above entirely, yet remain compelling for additional features which hold more value than any of them to a non-RPG player. What those features would be I can't say, in part because I haven't worked them out entirely, and in part because I don't know how all of them would fit together.

Since when do RPGs need a good story? Are the first 3 Final Fantasies not rpgs? They all have the same basic find the crystals storyline. Also where did you get the Puzzle from? I don't see too many puzzles in pokemon games. As for Adventure I will say again, is there much adventureing in pokemon games? More so than other rpgs?

why does everyone always forget Pokemon?? D=

WoW, I pay attention to what people do, not what textbooks say people do. When one RPG series sells multiple millions while countless others sell mere hundreds of thousands at best, yet there is little to no quality difference between the series that are selling well and the ones that are not, I think it's safe to say that the market is not properly differentiated.

That's kinda like saying Mp3 music players are niche because none are really popular outside of Ipod.

Sure Square, Enix and SE are about the only ones outside of pokemong to reach 1 mil sales in Japan... but how many S, E and S-E games have done so?  A 40+?

It's not that RPGs are Niche.  It's that S-E has a competitive advantage over other RPG makers.

That advantage beign the Square and Enix names.

How many genres have more million sellers in japan then RPGs?

Pokemon was just able to overcome this by being both different, and marketable.

so how would you define "niche" then? I thought it referred to an 'unpopular' genre. I just took his analogy on the "nicheness" of JRPGs in the west and applied it to Japan itself.

A RPG doesn't need a good story but there atleast should be more effort in the story department than in the NES era

O dont get how JRPGs are nich gaming when they sell better then most WRPGs. The only WRPGs that I have ever heard of doing will are the Bioware ones. Bethesda's are off and on with certain ones getting press(oblivion). All others hardly ever get over 1million in sales. The top ten best selling franchises are mostly comprised of Japanese made games, toping the list with Pokemon at number 2, Final Fantasy at number 4. I dont even think a Western RPG is in the top ten at all. I remember a time when JRPGs were just called "RPGs", the change didn't happen till the flood of xbox WRPGs.

Americans like the Japanese games more then most give us credit for. And JRPGs are not "Niche" but actually the dominant RPG period in North America, why do you think the world goes crazy over the tiniest bit of info on a Final Fantasy?

Which is what i'm saying... in Japan it has more million sellers then most other genres. 

Just because they all come from the same manufactuer doesn't mean it's niche.

Just that for some reason only S-E RPGs sell outside of pokemon.

Brand name, image, advertising, every bit of that is part of product differentiation. 

The whole point of product differentiation is to convince the consumer that they should buy your product versus a competitor's based upon some dimension of your product being better or more appealing.  If it's brand name?  That's fine.  If it's a game engine?  That's also fine.  You don't have to be wildly different to differentiate yourself from the competition.