Sony hasn't really ever invested in Japan. SCE is nearly 20 years old and they only own 2 studios in Japan, the aptly titled Japan Studio, and Polyphony Digital. They don't even own Clap Hanz, and that's a studio that has worked exclusively with SCE since 2000.
As for their support, it came with hardware sales. PS1, and PS2 were the undisputed kings in every sense of the word during their heydays. The PS3, PSP, and Vita not so much. You don't have to be #1 to be a success (as PSP demonstrated), but being #1 helps lead to more.
Smaller outfits simply can't afford to keep up with rising development costs, so many have either shut down or moved to the cheapo depot of mobile games.