Japanese developers are still in denial about the state of their nation's industry, according to Keiji Inafune, head of R&D at Capcom.

At last year's Tokyo Game Show, Inafune publicly lamented the state of the country's games market, stating: "Japan is over. We're done." Twelve months have passed since then, but the Dead Rising 2 director feels that the situation is as bleak as ever.

"I said that comment hoping that the Japanese creators were going to wake up," Inafune explained, speaking to VideoGamer.com at a hotel in London earlier today. "However, there has been no change whatsoever to the situation since last year, so I'm still very pessimistic."

Inafune believes that a complete change of attitude is required if Japanese developers are to revive their fortunes.

"I feel that many people in the industry are still living the glory of the '80s and '90s, so they don't admit that there is a problem to start with. However, looking at the domestic market, it's shrunk. Therefore it's really important that we realise that we're behind the Western market now, get humble and start learning what's going on. Otherwise the Japanese market is going to disappear completely, sadly.

"There are some publishers who are starting to buy up Western developers. However, unless they start working with them properly, rather than just commissioning a game and then putting their name on the final product, it's just not going to work."