The Xbox's lack of success in Japan is a long running joke, but the irony is that Microsoft's console is indirectly to blame for many of the Japanese games industry's current problems, writes Roger Hargreaves.

Microsoft certainly intended to break the dominance of Japanese hardware, but little could they have guessed the affect they'd have on software as well.

But really it isn't their fault.

Although the influence of Western publishers and developers had been increasing throughout the 32-bit era, when the PS2 launched almost all of its killer apps were still Japanese made.

The Xbox though had almost no Japanese support its entire lifetime and so had to rely on Western games like Halo.

The rest is obviously history, but the Japanese response to the rise of Western gaming has been bizarre.

As Western PC developers began to successfully move over to the console formats and first person games become dominant Japan panicked.

Rather than staging a counterattack with new games of the sort only they specialise in they became cheese-eating surrender monkeys almost overnight.

Instead of trying to woo back gamers with their own titles they started trying to mimic other people's.

All of sudden big name Japanese publishers were relying on little known Western developers to work on well-established franchises from Silent Hill to OutRun, Final Fight and Contra.

Those games that were still Japanese made, such as Resident Evil and this week's new Final Fantasy, were remoulded as action-orientated fare.

Brand new franchises like Lost Planet were designed to be so from the start.

When inevitably many of these games were not the instant successes that had been hoped it led to further panic.

Not only that but by relying on others to make their games internal Japanese studios began to fall behind in terms of technical prowess as well.

With the cost of making games rocketing it becomes more difficult to catch up by the day and more teams turn to off-the-shelf solutions like Unreal Engine.

Although it was less obvious when games were cheaper to make the Japanese reputation for quirky game ideas and presentation is built on the fact that they could still make a profit from a game that only sold well in Japan.

Now that game budgets are much higher that's no longer true and the games have become less distinctive.

That or, as in today's review, the technology has begun to stagnate.

It's hard to say whether the initial cowardice shown during the rise of the Xbox merely lessened the inevitable collapse of the Japanese games market or helped to hasten its fall.

Either way it was clearly no solution and Capcom has become the first to go back to making more games in-house.

Whether that will mark an end to the decline is unclear but trying to play others at their own game isn't working.