I don't see the gaming industry really going anywhere, IMO. The games in this generation aren't like they were in the last batch. The main issue I have with most of these current generation games is that so much effort is thrown into the way they look and the multi-player content and DLC, that the story line gets the shaft, and if it's not the storyline, it's the online gameplay,voice acting, controls, or the glitches. I'm not saying that there aren't any games with a good story line, but finding one with an appropriate length is what's really killing me. Maybe it's just because I'm limited to only PS3 games, but I really would like to see all that good stuff which drove the PS2/Xbox/Gamecube years.
The second factor that's killing the gaming industry is the cost of the games. I get the basic facts about how production=price, but if we could find a way to make it possible for games to be at least $40.00, and still have all the great aspects to make it something worth playing, the market would be better. However, with this recession that the American economy is in, it might take some time before we will see a rise in the purchasing of games/movies.
The third factor is the, I guess one could say, "flooding" of one type of game in the market. Nowadays, the big thing is FPS. It seems that everyone wants to make one, and to try and copy off of another game's success to do so (like CoD), or try to combine two aspects taken from other games (as in free running and Shooting in Brink) that the game developers don't realize how big of a piece of crap that they made until they see the income from that game and then lose their jobs. Kinda makes buying a game become pointless.
The fourth factor, of which the OP stated, is the reviews are killing games. Take this horrible, if not just raciest, review by this Xplay guy.
How in the hell they let something like this air on national television is beyond me. This game looks awesome, and I'm really dying to get my hands on a copy so I can test it out for myself. However, like many games, it has taken from others. The vehicle system and kill streak rewards could be cited from any number of FPS, but these are set apart in the function of that they can be upgraded. Although the story is short, it has some really heart and gut wrenching parts that make you wonder, 'Holy S***, how did that get into the game?'
The fifth factor that is crippling the industry are remakes that blow. Everyone like the Final Fantasy series when it first came out, and began to enjoy the cinematic's and it's unique fighting/attacks. However, as the series began to progress, it suffered from many of the factors in my first paragraph. Take away the story/controls/things that made the first few awesome, and then you are truly screwed.
The final factor, again, stated by the OP, is that the Japanese gaming industry tries to introduce something new to the market, but can't get it translated or have to keep it in their country because we don't have any understanding of it here. Does this mean that there aren't any games that we have from Japan? No, but sometimes the voice acting stinks when it comes to translation of video games. If you ask me, some games are better off with the Japanese voices and English subtitles (although, the literacy rate is dropping, which is why some games don't have them at all.) Take the Yakuza series. If you haven't see or heard of this series, but seen the game for cheap in the store somewhere, don't hesitate to grab it. This game does one thing I've never seen in a game before: provide videos that actually show the things that happen in the last game. Sure, they can go for at least 10mins, but these add on to it's epic story line. Sure, it's a Sandbox game, and the combat isn't much, but the story will make your heart go out to the main character(s) like they were real people.
In short, yes, I do think the Industry is dying, but it can recover; just as soon as we get out of this Recession and titles become more impressive.