Japan is becoming irrelevant in the big picture nowadays, they seem to have flocked to handhelds. Not sure why people keep using Japan as a barometer it's one of the smaller regions and does not hold the weight of the industry like it use to.
The fact that a tiny island which constitues the third largest market with a pop of only 130 million makes it very relevant. Close to 1 in 5 PS2 and 1 and 4 GC were sold in japan. According to vgcharts 17% of nexgen home console have been sold in japan.
The second biggest market is the PAL territories which includes about 100 countries including all of Europe, Russia, all of Africa, the Middle East, and parts of Asia. The PAL territories encompasses a population well over 2 billion people. Any one of those individual PAL territories's hardware sales would pale in comparsion to the amount of hardware japan moves with only the US being the only country in the world able to outsell japan.
Japan seems to be flocking more towards Nintendo then it is hand helds. The PSP is selling better in the PAL territores and Americas than in japan while the opposite is true for the DS.
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