The vast majority of Era posters are horrible videogame historians. When you use Nier Gesault as an example of how Western media had an anti Japanese agenda

The main shift was Western/European developed console games were more consistent in quality, while Japanesw console games that weren't first party Nintendo games were a lot more inconsistent. Nintendo was incredibly successful, Capcom fared mostly well, Sega did ok, every other Japanese publisher tho?
Japanese developed handheld games were often critically acclaimed or cult classics.
It was a misunderstanding of the Japanese of what had happened. First, their old timers refused to retire and innovate then suddenly seemingly out of nowhere big hits like GTA4 and Call of Duty emerged.
Inafune said things like: "Japan is over" and they honestly believed it and started to outsource things to the west or started using Unreal Engine because that was 'better'.
What they didn't understand until much later is that a lot of great western games weren't "new" they were simply adapted from earlier console and PC games.
It was more or less a perfect storm of consoles like the Xbox 360 adapting the PC architecture, developers like BioWare and Epic Games making consoles their primary platform plus tons and tons of marketing.
The latter was mostly effective in covering up the many failures of western developers like Rare, Midway, Junction Point, Lionhead, Westwood and many others.
Some of the games that were hits also had very long development cycles or were simply ported over from the OG Xbox while the Japanese were still churning out PS2 hits very late into its lifecycle.
That it was all a fluke was clear once the dust settled. Cliffy B never got another hit as big as Gear of War, Jade Raymond 'retired' into desk jobs for most her career, Square Enix sold Eidos for peanuts and Ken Levine ran into a wall with Bioshock Infinite.
All in all the western publishers and developers quickly ran everything into the ground with their hubris. Once they started focusing on game development again the Japanese developers quickly caught up.