I think the key thing that creates the idea that porn is rampant in Japan is that the porn is very visible. In terms of availability and distribution, I agree that it does seem rampant because while in other countries there are usually specialist shops that deal with adult goods and porno, in Japan it is normal for any bookstore or video stores to carry adult material in an obvious manner.
In most convenience stores for example, the porno rack is next to the rack for normal magazines (although there is usually an age restriction warning). Bookstores and video/DVD/VCD rental shops usually have a segregated adult section. Smaller bookstores in residential areas in large cities also sell adult material.
Another point is the popularity of Japanese porn not just in Japan but also overseas. As Japan has a roaring porn industry, the volume of AV being produced creates the idea that porn is rampant in Japan. Since so much is being made, and so much of it is in Japanese only, Japanese must be consuming it.
The cost of porn in Japan is ridiculous. Something like $35+ per DVD when you would pay half that price for the same thing in the US. The cost of production is relatively the same, but the demand on the market isn't in comparison to larger countries like the USA.
Porn in Japan might seem expensive, but the fact remains that there are many Japanese who actually buy porn DVDs and magazines rather than just download everything. For those who aren't into buying videos, renting is much cheaper and easily available. I would argue that there is a huge demand for porn independent of the price of production.
I have yet to meet a Japanese guy who actually watches JAV. Not because he doesn't want to watch it, or is too embarassed to admit watching it, but because it is so expensive there even by Japanese standards. Most guys have other things they would rather spend their money on than an embarrassment. Gosh, and do they find it embarrassing! Good luck trying to get a Japanese guy to actually watch a porno with you or something.
I disagree strongly. I have yet to meet a Japanese guy who doesn't think watching some JAV is normal. They do of course point out that too much of anything is bad, but all the Japanese I have met say, yes it's normal to watch AV. On the other hand, I never pressed them to reveal what porn they watched or like, since it was no business of mine. I wouldn't say that it is very prevalent for guys in the US to gather and watch pornos and jack off either. Whether in Japan or the USA, most people masturbate in private.
I don't think we realize just how common it is in the US for people to watch and even discuss porn with each other, like we're doing right now on this forum. Despite how open Japan is about advertising adult material and making it easily available, we're really much more liberal regarding this subject in the west. Porn in the US is now a socially accepted cultural norm. I don't know if the same can really be said about Japan.
Japanese people are usually very private. Close friends or AV fans might discuss the latest porn or what they like, but there is no reason for them to reveal such 'sensitive' information to anyone else. Japanese people are also especially sensitive to the fact that their country is perceived as being somehow sexually depraved due to the relative visibility of porn and are thus likely to be careful about the topic when speaking to foreigners.
Japanese people do not deny that AV exists, and the wide availability of AV arguably mean that it qualifies as 'normal'. I believe that for the Japanese AV is a fact of life, but the cultural norm for them is that it is a topic that is not for public discussion. A culture of being conservative about talking about sex is something that is common to many countries. Behavior is not always an accurate indicator of attitude.