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“I look around Tokyo Games Show, and everyone’s making awful games; Japan is at least five years behind.”

                                                                                                           – Keiji Inafune, formerly of Capcom

20 years ago, Japan ruled the gaming roost. Now, the “land of the rising sun” is on life support. Japan is “five years behind,” says Megaman creator, Keiji Inafune. Indeed, Japan is dead, buried, gone the way of the dodo bird…or so goes the old saw. The reality is far more nuanced.

For those who grew up in the Reagan era, Nintendo was gaming. Sure, the big “N” faced stiff competition from an upstart sporting a snarky blue hedgehog, but when the dust settled, Nintendo emerged victorious. They also produced the top hits of the decade…and the decade after. From 1990-99, 30 of the top 50 selling games (worldwide) were on Nintendo consoles. 35 of 50 came from Japan. Japanese gaming seemed unstoppable.

The conventional wisdom says Japanese gaming subsequently took a nosedive. But the numbers say otherwise. Going by sales figures alone, Nintendo dominated the last decade. In the years 2000-09, 30 of the top 50 sellers (including 9 of the top 10) were Nintendo properties. 34 came from Japanese developers. So where’s this unfathomable rut? What lead does Japan need to regain?

The critical/commercial divide is where the discrepancies arise. From 1999-2010, the Academy of Interactive Arts & Sciences gave its “Game of the Year” award to a Western property.  The critical darlings for the past ten years have trended towards Western IPs—Red Dead Redemption, Mass Effect 2, Uncharted 2, Bioshock, Grand Theft Auto IV, Fallout 3, LittleBigPlanet, Batman: Arkham Asylum, Modern Warfare 1 & 2, Black Ops, etc. These are the games devoured by “core” gamers—creatures who don’t march in lockstep with “mainstream” gaming. Many of the notable exceptions (including Resident Evil 4) are decidedly Western-themed.

In the 80’s and 90’s, Nintendo, Sega, Capcom, Konami, and Square were synonymous with gaming. But the times they are a-changin'. BioWare, Naughty Dog, Infinity Ward, Activision Blizzard, and Valve are the new innovators…the young Turks leaving the “old guard” behind.

Thus far, sales charts have vindicated Japan’s notoriously conservative business practices. But the tide may be turning. In 2010, the U.S. sales charts were dominated by Western properties (the exceptions being New Super Mario Bros. Wii and Wii Fit Plus). Japan went in a radically different direction, which highlights the growing divide between our two countries. While Japan happily subsumes portable “kiddie” titles like Pokémon Black/White and Monster Hunter Portable 3rd, the U.S. prefers HD mega-blockbusters like Call of Duty: Black Ops, Madden 2011, and Halo: Reach.

It’s also true that Japanese gaming is overly-represented by Nintendo. The 2010 worldwide sales charts bear this out. Minus three exceptions (Monster Hunter Portable 3, Gran Turismo 5, & Final Fantasy XIII), Nintendo is Japan’s lone flag bearer. Otherwise, the West stood triumphant. Call of Duty Black: Ops took first with 18.88 million units sold. Considering the closest rival (Wii Sports) was a pack-in game, that’s quite impressive.

Japan may be “five years behind,” but while there’s still a market for JRPGs and “cutesy” pocket monster games, they’ll continue to dot the landscape. The momentum may be shifting, and mavericks like Inafune may be proven right. But for now, it’s far too soon to proclaim the death of Japanese gaming.