What it's not doing is going extinct.
Throughout the 1980s and 1990s, there was a huge youth boom in Japan that reflected a baby boom. In years past, Japanese families were large—before World War II, they were even larger. Companies catered to youth culture. In those decades following the war, toy makers did big business, and Nintendo struck gold with the Famicom. But as the Post War generation settles into its senior years, that means more and more companies are targeting them. With games like Brain Age, Nintendo was very much on the forefront of this. And as Japan grays, there is more catering to seniors, such as putting more medical facilities in shopping malls. Arcades have now become hangouts for many seniors—something that was unimaginable a decade ago.
It doesn't stop there. According to website The Tokyo Reporter, mature women or "jukujo" are finding increased favor as models, hostesses, and, yes, even adult film actresses. In Japan, "mature women" are women in their 30s and 40s—ages that should be considered young in youth-crazy Japan. The country currently has one of the highest population of people aged 65 and up. However, Japanese youth culture is not finished. It remains vibrant and interesting as ever. And, no, the country isn't finished either—though Fox News recently said the "entire nation could go the way of the dinosaurs".
The declining population is a problem. In Japan, like many nations, health care costs are ballooning, and without a growing population, the pyramid scheme it's based on is in danger. Also, yes, the population is on the slide. And yes, it will get drastically larger. All of these issues are worth exploring and discussing—intelligently.
Fox News based its report (which you can view here) on data by Hiroshi Yoshida, an economics professor at prestigious Tohoku University. The report was circulated throughout in the Western media, with Professor Yoshida saying, "If the rate of decline continues, we will be able to celebrate the Children's Day public holiday on May 5, 3011 as there will be one child."
The year 3000! Just think about what life was like a thousand years ago—it wasn't even remotely like our lives today. Did people a thousand years ago foresee cars, video games, and heck, even countries like the United States?
Yoshida has a population clock that's tracking this—a website that needs a serious redesign. And his data needs a serious rethink. That's all it is: data. His numbers are utterly meaningless. He's assuming that everything between right now and one thousand years from now will remain utterly static.
For example, right now Japan is not aggressively pursuing immigration to increase its population. But if you compare its policy now to, say, just over a hundred years ago, it's become far more progressive—for Japan. Remember, this is a country that closed itself off from the entire outside world for centuries. Japanese people weren't even permitted to leave the country under penalty of death.
In the decade plus that I've lived here, Japan has changed. And Yoshida is assuming that during the course of the new thousand years, the country (and the world, for that matter) won't change. It will. There will be wars, there will be booms, and there will be depressions. The number of infants will increase and they will drop. Just like they have in the past.
Going back and looking at predictions from the year 1012 must be equally amusing.