Even then, their games are distinctly Japanese, with their random battles, turn-based combat, anime girly men, while the Westerners have their online play, drop-in/drop-out co-op, cover systems, GUN SHOOTING THAT DOESN'T SUCK. But they're changing things up now. It looks like the Japanese are trying to emulate the Westerners now. MGS4 has a (convoluted) online mode. The Silent Hill guys are actually outsourcing their Silent Hill games to Western developers. Capcom's making games like Lost Planet and Dead Rising, and Resident Evil 5 is now rumored to have a cover system and co-op modes.
Like I said in a previous post, Hideo Kojima himself admitted
"Unfortunately, overseas game production companies, which are well-funded and extremely skilled, have surpassed us by a couple of steps...It was once said that Japan molded the world's video game [industry], but that's becoming a thing of the past. Sad as it may be, it's the truth."
Dillon also told me this one story he read about in some magazine about how Kojima's development team thought a certain thing impossible, only to see that Assassin's Creed had pulled it off successfully. I guess that's why Altair is in MGS4.
We all know Itagaki is in love with Microsoft. He went as far as to dis the PS3 version of Ninja Gaiden. He also loves GTA IV and Rockstar (probably 'cause he himself thinks he is a rock star >_>).
Speaking of rock, check out Rock Band and Guitar Hero. We all know that Konami started it all with GuitarFreaks in Japan, right? Well, Guitar Hero/Rock Band is the big thing, and Konami is just now trying to capitalize on it with Rock Revolution, and it's clear that it's not up to snuff to the music games born in the West (no vocals, all songs are covers, blah blah blah).
The big thing, I believe, that separates the West and Japan in games is online functionality. Check out Xbox Live. That's how online should be done. PSN is not nearly as convenient as XBL, and don't get me started on how crappy the Wii's online is right now. Microsoft gets it, Sony is getting it (thanks to Microsoft), and Nintendo just doesn't care (which is why I'm pretty much leaving them out after this. Yeah I just wanted to dis on Nintendo's online again :P).
Konami really messed up with Metal Gear online. I haven't played it myself, but I've heard reliable stories of needing at least 3 online IDs and passwords just to play the game. It's crazy stuff, man. Oh yeah, don't get me started on those Friend Codes on Nintendo's side of things.
But yeah...the weaboos may deny it, but the West, in my eyes, are the kings of gaming now. Don't get me wrong, though. I still love Nintendo, Capcom, Konami. I'm just saying it's pretty weird how things have turned up. I'm pretty sure that the Japanese will catch up to the West pretty soon. Then it'll be closer again. Hell, I bet the Japanese will probably come back out on top again...if they want to advance beyond where they are now.
So, in summary, Nintendo, get off your ass, release a hard drive for the Wii, and make your online work.