This sucks because I'm a big fan of Japanese games and if the Japanese game style changed drastically to recharge the industry or the American style became standard I would potentially lose interest completely in videogames.

However I want to know how bad "down for the third year in a row" is. Just being down doesn't mean a loss or the complete death of the industry. The industry can still stay alive with lower sales. Is this the difference between strong and weak or really strong and not quite as strong?

This could all be just like the standardized testing thing at my school. They said it was declining over the years but it was by like 3 points. All i'm saying is that its not much and it'll bounce back.

If it were that small of a decline than Iwata wouldn't be making such a big deal about it...

One thing I noticed was that this has been happening for the last 3 years. This has been when PS2, XBox, and GC were first released. I am really beginning to see Iwata's point now because before this console war, each system released offered new ways to play because of the huge diffrence in graphic power. If you compare the games of the PS1 and PS2, they are pretty much the same games only in graphics. Sony and Microsoft need to realize this as well, because that is all they are thinking about for their new systems-graphics.

True.

I still believe there's more to do but i seriously don't know how much you can get from the hardware side. IMO it's the developers who should be the innovaters, but thanks to all the gta, MGS, half-life, and sports games i think the game industry is just turned into to much of a business like the movie industry.

As a experienced old school gamer i hope things turn around and IMO Nintendo is the one to turn it around. The way i see it is they did it before and they will do it again.

I've been hearing about the shrinking market in Japan for a while. I don't think it spells doom for Nintendo or the game industry in Japan in general, but I think that Iwata and even Yamauchi predicted this and hopefully they both have the right idea that ongoing innovation will keep Nintendo strong even if the casual market shrinks significantly.

At the same time, I don't think this is going to destroy the industry. As the article states, the consoles are reaching their saturation point (ummm...I mean, they've sold as many as the Japanese market will buy), so it's not so surprising that sales are down somewhat, especially since the PS2 is already four years old in Japan.

More comments...I'm scatter-brained this morning!

I think it would be beautiful if all this translated to a stronger market for Nintendo in the next generation (assuming Revolution is really revolutionary). Of course, it seems to me that Sony is also looking to create different kinds of games. The Eyetoy and the rumours of a PS3 "Power Glove" are both signs to me that Sony is taking innovation and the gaming industry in general very seriously. That's something I'm really glad to see, Sony is actually starting to earn some real respect from me.

....Bunta!

Oh, so maybe the Japanese developers will finally realize nobody wants to play four hundred different versions of the same game that all need to be linked up with eachother on the MOON to unlock a sound test. Or their new found obsession with card based RPG's. "Hey here's an idea, we'll make a cool RPG with another 'the world is exploding from a bad guy with mind bullets' and leave all the fun of the battles to drawing random cards from a deck! We'll have a winner!" =\

Sales in japan are down over a quarter from five years ago.

The problem is that sales aren't down equally across the board. Big titles are less affected, but niche titles are taking heavy losses.
Fewer and fewer games are making a profit. Most games even for a handheld cost at least half a mil. to make. Given that the developer sees at MOST $5-7 from each copy sold they have to sell 100k units to make a profit. This hardly ever happens. Less than 20 percent of titles sell that amount. Therefore most developers are living on royalty advances to fund development and never getting anything more than subsistance funding to run on fumes from contract to contract with no margin for error. For larger publisher/developers it means producing more titles more quickly with the same staff to keep revenue at the same level - meaning a lot of similar games and sequels and rushed licenses.

Even now, many companies in japan who have made great games in the past have gone under, with a lot of talented people being swallowed up by either larger game companies or other industries. This is a tangible difference, not just a numerical abstract one.