Harvest Moon creator Yasuhiro Wada has been in the game industry for a long time. He's seen all sorts of trends come and go, and definitely has a keen eye for what the more casual gamers out there enjoy. In an interview with Game Informer, Wada is asked why he think Japanese-developed console games kind of faded away, but have come back big in recent years. You can find his personal explanation below.
So right around when the Wii launched, around 2007 and 2008, the Japanese market was trending toward making games that were very clearly for the otaku market. The Wii had absorbed all the casual game players, so the remaining developers focused on what would make them money. As a business, many companies leaned toward using tools that were easy to sell; for example, famous voice actors, guest character designers, things like that. So after a few years, once that Wii market has died, those Wii users basically decided not to play any more games. Overall the game market has shrunk as a result. There should have a second tier market, a gamer's market, where people who simply enjoy games would buy titles, but those people have basically faded away with the Wii market. All that was really left was the very hardcore otaku market, so those semi-casual players left the market as well.
After that trend, the trend was mobile games. These very simple mobile games were playable on, not-smartphones but old style cellphones, those became popular and people just walked away from console games. So you have these really hardcore gamers and the super-light users, and in-between there should have been a market for casual gamers, and those gamers actually went to mobile. When smartphones became popular, that middle-tier market went to smartphone free-to-play games.
The Japanese mobile game market is a little bit different than the rest of the world, where free-to-play is free-to-play, but Japan places emphasis on the gacha system, which is sort of like a roulette or gambling-like system. People who got addicted to the gacha system, they would spend tens of dollars, hundreds of dollars, even thousands sometimes. On other platforms, if you paid $50 or $60, you'd be able to play the same amount of content. There's no way that this type of business model would last a long time, though. It expanded very rapidly and then there was a point of no more expansion. That middle-tier market realized that their smartphone games, the free-to-play were basically just monetizing machines.
When those users realized that they were being monetized, the timing was correct in that the Switch came out. The PlayStation 4 was able to keep or sustain those gamers that have played console games all through the years, but those people who moved over to mobile and then realized that they're throwing away money into gacha, they realized "Hey, this is not a game." So they wanted to play video games and that's why I believe they have returned to consoles. That's all just my opinion, of course.