Ehhhhhhh, Xenoblade "saving" JRPGs is pretty hyperbolic; if anything it just held the line until Japanese gaming recovered in 2017. The thing about the JRPG going into decline had more to do with the mindset of the 7th console generation. During that era you had Western companies finally catching up to Japanese ones on the development side, usually by throwing obscene amounts of money and people at development cycles due to how HD bumped up costs which Japan struggled with due to differences in available resources as well as the fact that Japan was becoming more of a portable-centric market with the DS and PSP. There were tons of great RPGs on the DS and PSP, but because they were on portable systems the more snobbish and elitist sectors of gaming (both in the audience and press) turned their nose up at it. And it wasn't just with RPGs; Japanese gaming in general was looked down upon as being too weird and foreign, leading to a bunch of really uncomfortable dogwhistling straight out of the Japanophobic 1980s. It also didn't help that this coincided with the crash of the anime market in North America at the time with licensors like Geneon and Bandai's North American arms closing up shop followed shortly by ADV Films (this alone is something that could warrant its own thread). The idea was that all that weird, yucky Japanese influence was finally out of videogames and things were now going be a golden age of Western dominance.
As for RPGs themselves, a lot of it had more to do with people only being familiar with Square and Final Fantasy more than anything. Post-2000, Square was beginning to show problems mostly due to an exodus of talent. Co-founder Sakaguchi left due to Spirits Within bombing, Tetsuya Takahashi had left to form Monolith Soft and the coming years wouldn't be any kinder. Square basically had no real mentors around to help guide the company, instead being left to people like Yoshinori Kitase and Tetsuya Nomura who didn't really seem to know what to do. They really just seemed to want to keep doing FFVII over and over again and it led to a lot of problems. Yasumi Matsuno (who had been picked by Sakaguchi himself) was directing FFXII and trying to do his own thing by amping up the political aspects, but found himself dogged by executives who were scared shitless of pissing people off because Matsuno is about as subtle as a sledgehammer when it comes to calling people out. He decided he wasn't going to give himself a mental breakdown to satisfy cowards so he left the company and is to this day working with his own idea factory. After that the Ivalice setting was essentially dead as no one at Square wants to work on the setting without him. FFXIII only exacerbated the problem because of its reception. A lot of it was indeed unfair, but also XIII is a pretty middling game. And XIII's director, Motomu Toriyama, couldn't keep it to just one game. For some reason Square kept trying to push him as the next golden boy, letting him not only make two sequels to FFXIII but allowing him to write entries in the Front Mission (Front Mission Evolved) and Parasite Eve (The 3rd Birthday) franchises, entries so bad they basically killed their respective franchises (3rd Birthday in particular is one creepy game). The entire expanded universe for XIII also went nowhere with its two sequels being received less and less favorably in reviews and sales. They even had to switch Agito XIII to Type-Zero and Vs XIII became XV due to how toxic the XIII brand became and Toriyama was relegated to the mobile division until he was allowed to co-direct the FFVII Remake for some reason.
Then came the REAL blow. XIII was divisive, but had its fans. XIV's initial launch on the other hand was a complete disaster that has no fans and was one of the biggest losses in Square's history. It led to the departure of Squaresoft co-founder Hiromichi Tanaka and Dragon Quest X veteran Naoki Yoshida was left to salvage things. So, biggest RPG maker in Japan has gone into its dark age, no one knows what the hell they're doing, Western gaming is making money hand over fist, and Mega Man producer Keiji Inafune is saying "Japan is over", so the RPG is dead.
But, the problem is, even at the time that idea was hyperbolic and shallow-minded. RPGs were not kept to just one company. Square's failures created a vacuum, one that had many people willing to fill that void. And the RPG was never some static, rigid genre as shown since its inception. No, what happened was other companies stepped up and became the standard bearers. Atlus began it with bringing back its Persona series, pumping up its social aspects and doubling down on its Japanese flourish. Bandai-Namco spearheaded FromSoft's Dark Souls series which took things in a dark fantasy meets survival horror vibe. Even Square had successes with stuff like Bravely Default. And when Intelligent Systems made one last hurrah with Fire Emblem Awakening in 2012 it ended up being the spark the franchise needed to revitalize and reinvent itself, being even more stylized and really pumping up the social simulator aspects. The RPG was going nowhere, it was just overshadowed by more spectacle-driven titles with overly big marketing budgets.
And cracks had been showing for awhile. The thing is, the "just throw money and people at it" approach was never going to work forever. The problem of the industry in the West were beginning to show. Studio closures were happening left and right, franchise fatigue was setting in, employee burnout was a common concern, and companies started becoming less and less interested in things that weren't guaranteed multi-million sellers. Meanwhile, all those attempts to cater to Western markets by Japanese companies flopped. Even by this point Naoki Yoshida had pulled off the comeback of the century with FFXIV being completely revamped from the ground up in two years and becoming such a cash cow for Square-Enix that he can basically do anything he wants now (even getting Yasumi Matsuno to write storylines for the game because Yoshida is a huge fan of his). Japanese gaming turned out to be pretty resilient with RPGs slowly working their way back after a lot of Western RPG devs like Bioware began to falter. It was also helped by the fact that a second anime boom began to happen with licensors beginning to switch over streaming services like Crunchyroll and simuldubs becoming more common as time went on. Heck, one of the biggest hits in anime was the long-awaited adaptation of Jojo's Bizarre Adventure, an unapologetically Japanese series.
And in 2017 things came to a head. Not only did it have the long-awaited arrival of Persona 5, but also Nier: Automata, Yakuza 0 and Kiwami, Nioh, and of course the motherfucking Switch which had THREE games that were basically GOTY contenders with The Legend of Zelda: Breath of the Wild, Super Mario Odyssey, and Xenoblade 2 as well as other titles like Fire Emblem: Warriors, Splatoon 2, and a ton of enhanced ports of titles like Pokken and Mario Kart 8. It was like Japan came roaring back to say "The master is back, you fucking amateurs." And that hasn't really stopped what with Japanese games being on equal footing with the West while a lot of Western companies are now either drunkenly stumbling around trying to figure out what to do with themselves or taking cues from Japan. People who came of age during the Anime Boom now had significant influence due to either buying power or being in the industry themselves. Visual novels finally carved out a devoted niche in gaming due to titles like Zero Escape. The decade-long Fighting Game Boom has never stopped with EVO being bigger than ever with robust titles like Street Fighter, Tekken, Dragon Ball FighterZ, Granblue Fantasy, The King of Fighter XIV, Samurai Shodown, Granblue Fantasy VS, Blazblue, Guilty Gear, and Soulcalibur VI. The JRPG never needed saving because it was always there and never going away. People who prematurely sang its death knell did so either out of ignorance or bad faith. Japan retook its crown and frankly it's probably going to be a long while until it gives it up.
