Here’s an interesting article on the death of Buddhism in Japan. Until recently the Japanese have been connected to Buddhism mainly through funerals but even that tie is breaking:

But the move to funeral homes has sharply accelerated in the last decade. In 1999, 62 percent still held funerals at home or in temples, while 30 percent chose funeral homes, according to the Consumers’ Association. But in 2007, the preferences were reversed, with 28 percent selecting funerals at home or in temples, and 61 percent opting for funeral homes.
In addition, an increasing number of Japanese are deciding to have their loved ones cremated without any funeral at all, said Noriyuki Ueda, an anthropologist at the Tokyo Institute of Technology and an expert on Buddhism.

The article seems to blame the finical practices of the temples, saying that the funeral cost is at the discretion of the family but pressuring them to give generously. But it sounds like the problem started when people became “funeral Buddhists” which sounds similar to the C& E Christians (Christmas and Easter). You know there’s a break in a religion when the next generation isn’t interested in continuing it.
So, what will replace it? I’m thinking that it’s probably materialism and/or agnosticism. It’s generally what you fall into when you are no longer rooted in a religion. They might even retain some of Buddhism teachings but not follow it’s traditions, sort of inoculating them from following another religion, that’s another path the younger generation follows. Just like those who call themselves Christians because they were raised as Christians but really don’t belong to a church.