I understand how big it was, but that didn't mean it still hasn't had decent contenders. Digimon was perhaps second popular to Pokémon, maybe followed by Yu-Gi-Oh. And while Digimon nor Yu-Gi-Oh were no where close to topple Pokémon from the throne of battle monsters, they were still big and noticeable contenders.
Digimon and Yu-Gi-Oh! franchises start point don't far from Pokémon though.
Digimon franchise debuted in 1997 while Yu-Gi-Oh! and Pokémon in 1996 so both of them have time to catch up their rival.
Digimon did well to diffeentiate from Pokémon by doing different approach : narrative arcs that change characters each season/chapter/entry (anime/manga/game) and lean into darker, more mature themes as the audience ages.
Yu-Gi-Oh! TCG meanwhile did well to make it known for extreme complexity, massive combos, fast-paced matches, and the possibility of ending a duel on the very first turn while Pokémon features simpler, slower, and more affordable mechanics which make it remains vastly more popular for casual collecting.

I thought it was obvious why the Sonic films failed in Japan. Because the Sonic films are American. Despite Sonic being from an alien planet, he chose a small town in Montana, instead of somewhere just as good in Kanto, Chubu or Tohoku. he chose to adopt American language and culture and was adopted by American family.
I figured the reason why Sonic has been struggling and falling out of favour of the Japanese audience, the very country he originated from, is because he has become more Americanised for Japanese taste. I imagine it's why SoJ wants to enforce mandates over Sonic SoA has to abide to because SoJ probably feel they don't have much say over Sonic's personality and style any more.
It's why Sonic Frontiers was so popular in Japan because... well, Sonic Frontiers give me Studio Ghibli vibes.
They did try to make it having more Japan-related thing by using Tokyo as background and even changing the movie title into ソニック × シャドウ TOKYO MISSION (Sonic × Shadow TOKYO MISSION) for Japan market.
And still that's not enough.
But I guess you're right. It might be more succesful in Japan if the movie was based on Sonic Frontiers with its Studio Ghibli vibes.
Couldn't that be said for any fandom? That there are more people who don't play games over people who play games?
Yes, they are still target market. But of course fandom still means nothing if they don't spend their money to their franchise holders, that's why even though they don't play the games they can still support the company by buying their merchs.
The best selling SEGA merchs right now here in Indonesia are Persona and some of Persona fans who bought them came from the anime but they don't play the games since playing games aren't their hobby.
