We see that in the west as well, of course. The reason that sandbox and FPS games are such a dominant portion of industry output isn't simply because people like them and nobody wants to play any of the "smaller" genres; it's that only those two genres can reliably generate enough revenue to justify the costs for a major PS3/360 game.
I mean, unless you feel you can significant international success, or are putting out a game that's essentially a PS2 game running in HD, I don't see why a Japanese publisher would want to make a console game.
Ni no Kuni just sold ~100-120K copies. Final Fantasy on consoles has imploded to the point where XIII-2 is going to sell in the range of Crisis Core and Dissidia.
I can pretty easily guess which of those cost a hell of a lot less to make.
What on earth is the possible incentive to not just make your game for 3DS?
Consumer interest in Japan seems to have decided that PSP specification games are good enough, and that only a marginal amount of people really want more than that.
If there is no benefit to going beyond that, publishers aren't going to greenlight titles that do, because it is just a money losing situation.
I wouldn't be surprised if when the Nintendo DS 3 releases in 6-8 years we still see games largely looking like PSP titles.
By the same token, since making a high end Vita title is much more like making a console game than a PSP game, that puts it in a pretty terrible situation.
Budgets were always going to be a huge issue for Vita when it came to securing non-niche original software, and after all the underwhelming events this year, it really does seem right now like Sony just threw a bunch of (very impressive) tech at the proverbial wall without having an actual software strategy to back up the hardware.
What else could Sony really do though?
They couldn't stop Nintendo from releasing a system at least as powerful as the PSP, at which point their advantages essentially became irrelevant.
For all intents and purposes, Sony is a Western publisher with a small and deeply troubled Japanese branch. They lack the capability and expertise to make exclusives compelling enough to sell their systems.
So, they took their best shot and made a system that would try and compete on tech, hoping that being able to play console games on the go would be compelling enough to sell their system in Japan and that maybe they would have even a snowball's chance in hell of catching on in the West.
I don't think it will work, but especially in terms of Japan, I'm not sure I see much else in terms of what they could have done.
Maybe they can tank their licensing fees to 1/4th of what Nintendo charges and try to sell the system entirely on games with only 100-300K sales potential. Those kinds of games don't need a huge installed base, and quite a few niche developers might find those improved margins compelling.