Moreover, Tales of Xillia is far from an isolated case when it comes to popular Japanese games not leaving Japan. Monster Hunter 3rd is the best-selling PSP game ever in Japan with 4,780,000 copies sold. Its PS3 HD remaster sold an excellent 500,000 copies as well, yet neither version is scheduled for an international release. Other neglected best-sellers include Gundam Extreme VS (510,000 PS3), Final Fantasy Type-0 (800,000 PSP), and Tomodachi Collection (3,670,000 DS).
In the early days of gaming, many titles were never released internationally simply because of the sheer volume of Japanese games out there. Some just slipped through the cracks for various reasons. But now, with downloadable services and less public demand for full localization (i.e., subtitles are acceptable), it has never been easier to release a Japanese game in the West. So why are there still Japan-only games, much less chart-topping ones?
Other than Nintendo's first party titles, this last generation has seen a large downturn in the popularity of Japanese games outside of Japan. The best-selling non-Nintendo Japanese-made game this generation was Gran Turismo 5, followed by Final Fantasy XIII and Resident Evil 5. In fact, of the top 50 best-selling non-Nintendo-developed console games, only eleven of the top fifty were made in Japan. And only two of those were in the top ten.
In large part, it seems that Japanese developers have given up on trying to make world-wide hits. A few years back, as companies became aware of the growing size of the world gaming market and shrinking size of the Japanese one, several Japanese game developers tried to make titles aimed at Western audiences. The games that came out of this included Vanquish, Ninja Blade, and Quantum Theory. None was even close to the groundbreaking international hit that Japanese game companies were hoping for, so most studios gave up on that approach.
Large publishers instead began to contract with outside studios to make Western-marketed games. Capcom hired British-based Ninja Theory for the next Devil May Cry, while Konami hired MercurySteam to make Castlevania: Lords of Shadow (with Kojima Productions overseeing the project). Square Enix has even taken this a step further and purchased an entire Western publisher (Eidos Interactive) to make Western games—i.e. Deus Ex: Human Revolution and the upcoming Tomb Raider reboot.
The majority of Japan-based studios, on the other hand, have doubled-down on Japan. Instead of looking for a world-wide hit, they have decided to focus on exploiting the numerous niches of their home market. By building games catering to the fanbases of these markets, they are able to almost guarantee a profitable game. In other words, instead of aiming for a big international hit and failing, they aim for the surefire win.Thus most companies just tend to ignore the West in regard to their Japan aimed titles—unless it's the newest sequel in a series popular the world over.
With this focus on the niche markets comes a focus on only producing content for the most popular systems. This is one reason why such a large number of big-named titles have come out on portable systems this generation. It is also the reason why the Xbox 360 is pretty much extinct in Japan.
Despite Japan-only games becoming more and more common, all hope is not lost for gamers outside of Japan. Sometimes international interest can be enough for a Western publisher to step in and bring the game west (like what happened with The Last Story and numerous other Xseed-published games). Or sometimes, as in the case of the aforementioned Tales of Xillia, the success of a similar game (Tales of Graces f) can be all it needs to finally get a scheduled release beyond Japan's shores—even if that release is in 2013, two years after its Japanese release.