Just to make sure on something, is western animation suffering from this as well or is it just japanese animation alone? ALSO AVATAR ISNT ANIME(buts its awesome).
Not really. The problems in the West are more based around marketing and management than anything else.
Good animation can be really expensive, so unless the network is going to get massive ratings and sell merchandise like gangbusters (or the network is contractually obligated to make more, i.e. Korra), they aren't going to invest. Nickelodeon makes so much more money from Spongebob repeats than new Legend of Korra episodes, it's ridiculous. Even the superhero genre is pretty much a bust at the moment. That's why there's been a flood of cheap, mostly Canadian "flashtoons" - poorly animated shows spit out by Flashplayer and then sold to American networks for a quick profit. Think Johnny Test, Total Drama whatever show they're on, etc.
Managerial incompetence is also a huge problem. Take a look at DC; they got a Batman show cancelled in its first season. That sort of thing would be unthinkable, but there you go. Marvel isn't doing much better. Man of Action has completely screwed the pooch on the whole line. Hell, new episodes of Ultimate Spider-Man pull smaller numbers than reruns of Spectacular Spider-Man. They're spending $500,000 per episode on animation that
looks like this. The only reason they're still afloat is that the toys sell decently.
It's not all gloom and doom, though. Disney's producing some great stuff at the moment (Gravity Falls is the bee's knees), and Fox/FX and Adult Swim have championed the medium pretty heavily. Say what you will about Family Guy (and there's a lot to say), but Fox's commitment to Bob's Burgers has been stellar, and with Archer, FX has produced one of the most consistently funny shows for the past 5 or so years. Adult Swim is in a league of its own, willing to fund great experiments, from stuff like The Boondocks to Moral Orel to Rick and Morty. Plus, I think western animators have been more on the ball with the internet, taking advantage of sites like Youtube to hone their craft and share their works.
It's a mixed bag, basically.