Pretty much, but it depends on whether or not they can adapt to modern distribution.
Big console games are expensive, and this has hit a lot of Japanese developers. So we'll see them (as we already are) ensuring worldwide success of their console franchises. Yes, this will mean then targeting the West quite heavily.
'Big' games that publishers/developers are concerned wont see extreme success in the West will shift to portable titles. We saw this a lot over the DS generation actually, and we're seeing it again with Shin Megami Tensei IV. That way they can keep budgets in check, and given the heavy increase of portable gaming in Japan be able to ensure success on the most profitable platform.
You'll still get a lot of niche Japanese console games that either wont leave Japan (for obvious cultural/franchise reasons), or will be picked up by Western publishers for a niche release.
The other alternative is that Japan will finally jump on PC (we're seeing this a bit more now) and digital distribution. I expect Sony and Microsoft's consoles to heavily adopt digital distribution, and for many Japanese developers this could be seen as an easy way to distribute certain niche games worldwide without the financial burden of printing, shipping and store marketing.
You realize there's a fundamental contradiction in the bolded, right? This western pandering does not create anything with worldwide appeal, it creates something with NORTH AMERICAN (and to a lesser extent European) appeal.
There were a ton of well-loved games in the 8-bit, 16-bit and 32-bit era that had genuine worldwide appeal. Catering exclusively to North American taste is a by-product of this generation, just like most Japanese games leaning heavily on being "Japanese" was a by-product of the last generation during the big Japan culture boom in the US.
Portable games were where the Japanese developers made games because, shock of shocks, they were the only platforms Japanese developers invested money in that weren't in the shitter userbase-wise. Many of them bit on Sony's (and by proxy Microsoft's) HD bait and had little to nothing invested in motion control design. R&D can't happen overnight, after all. So when PS3 sputtered out of the gate, they literally had ONLY one option for a solid user base to make games for that would sell, regardless of which audience that catered to.
To say that it will stay the same is a tad myopic. Portables in Japan are where they are because that's where the content all went, not because people woke up and thought consoles were totally lame. Nintendo pulled away from the Wii to build up the WiiU and left nothing but the 3DS for developers to latch onto. The money poured into PS3 game design at the start of the generation is only FINALLY starting to work out for them at the very end of the generation.
This isn't to say that Japanese game developers don't have their own set of problems beyond this. Many point out that they are becoming an industry just as insular as the anime industry over there. But at the same time, it's no different than it is here in the west; the only difference is that the western countries have a wider population base with which to pander to.
It's a new generation, and the first year is what always sets the rules for the next 4-5. Anything's open to change. Japan wants the console market they brought back from the dead in the mid-80s back.
Would be interesting to know the exact volume of that new PS3 model, just to give us a meaningful comparison against the WiiU.