The latest annual report from the Consumer Entertainment Software Association (CESA) shows that the games market in Japan declined once again in 2003, leading to an overall decline of some 40 per cent since 1997.
Sales of hardware and software dropped by some 11 per cent in 2003, giving the market an overall value of 446 billion Yen (3.4 billion Euro) - around 40 per cent of the value of the US market during the same year.
The biggest hit was in hardware shipments, which dropped 16.7 per cent - with only the Game Boy Advance managing to hold steady in terms of sales. This has been reversed slightly in the first few months of 2004, with the GameCube leading a sales boost of about 3 per cent, but the general conclusion is that the PS2 is nearing saturation point in Japan.
Software sales also dropped, however - with an 8.2 per cent reduction in sales, which contrasts with increases in software sales in both North America and Europe during the same period.
While an 11 per cent drop is a major problem in itself, the overall trend is even more worrying; the Japanese games market has lost some 40 per cent of its value since the PlayStation peaked in 1997, and CESA believes that there has been a significant loss of audience in that time.
Japanese games companies, by and large, haven't suffered that badly from the decline in the domestic software market - in fact, many have enjoyed growth through this period thanks to increased revenues from overseas. However, the situation is still a major concern for them; and many in the industry in the Far East will be hoping that the launch of the Nintendo DS and Sony PSP consoles later this year will bring about an upswing to repair some of the damage of the past six years.