Like other people have said, your post is well written, but I hope you give me luxury of disagreeing. Attributing a lot of the economic and creative issues that the Japanese side of the industry is having at the moment to "differences in culture" is a mentality that has a tendency to create too slippery of an argumentative slope for my tastes. It creates this unnecessarily mystical aura and a sense of "the other," making it all too easy to comfortably think that things are the way they are over there just because. The Japanese bow a lot because that's just how they do things. They take their shoes off upon entering a house because that's how things have always been. They're hellbent on etiquette and humbleness because that's just how the culture is. Their games just aren't plausible or viable anymore because they're from Japan. The reality of most anything is too complex to just be boiled down to supposed "cultural differences." There are logical reasons for how and why things happen the way they do in Japan and that most certainly includes their games.
It's not the culture that makes their games, their manga, their anime, their what-have-you; it's always, always the people and their individual life circumstances and perspectives behind them that are the driving factors. To boil it down to culture is to imply that everybody has the same mob mentality when that's hardly the case. If Metal Gear, Devil May Cry, Final Fantasy, and the like are flashy and without substance, it is because that's what the individual creators and development team were attempting to accomplish: something that's merely entertaining, not transcendental. If they can put a smile on a person's face or make them laugh or evoke most any other emotion, they've done their job and hopefully gotten paid for it. It was the decision of the people on those teams to go in that particular direction and economically, can you really blame them? It's not as though a lot of games throughout the world are superficial without a reason; consumers aren't all necessarily looking for metaphysical rhetoric a la Bioshock and nor are the thoughtful creators always able to produce the deep, meaningful games they probably entered the industry to create. If there are situational issues with Japanese games being too base, then part of it is at least a supply and demand sort of thing. People are buying these games and that tells the creators and company leaders that they probably want those styles perpetuated. But conversely, it's just as much a deliberate decision to go forward and try something quirky, daring, bold, or provocative if a game goes those routes. The lesser-sung heroes of the Japanese game industry from a creative standpoint, the Personas, the No More Heroes, the Trauma Centers, the older Final Fantasies all are the way they are because it was the people behind those games that opted to design those games that way. No More Heroes is not such a violent, oddball because that's just what Japanese culture loves; it's an oddball because it came from a dude who came up with the idea while sitting on a toilet.
These and other issues you brought up in your post are ultimately ones that pertain to all games equally of every region. Japan is getting the most attention right now because the industry is in decline for a number of reasons (not just alleged creative ones), but if you take a long, hard look at North American, European, and Southeast Asian games, you'll find superficiality and meaningless to be underlying qualities of a lot of games and, ultimately, other things in entertainment as well. Farmville is not a smash hit on Facebook because people are wanting to live the rural life online; it's because it has mechanics that have proven themselves to be addictive. Halo sells because it has a brand of viscerality that people really, really enjoy. Those sorts of games are doing well because they tap into basic human desires and do it in such a way that warrants continued attention and revenue. This is not a by-product of culture from anywhere, but from people who made the smart ideals relative to their desires and situations. The world is such a globalized place anymore that the creative byproducts that come from its people cannot be so simply attributed to culture, but life experiences and beliefs and the culmination of a lot of other factors. Everybody is so connected to each other and sharing experiences that there's just no way that any barriers that might still exist can be due to one monolithic, easily-defined thing. It doesn't do the matter enough justice.
If the Japanese industry is problematic to you (and it is for me, too, believe me), it's because of individual people and teams who decided to make their games in ways that just don't resonate with you in the way you want. You might not have been their target audience in the first place. Metal Gear, Final Fantasy, and everything else to come from that side of the Pacific are no more representative of Japanese culture than anything else the country might have to offer. Japan is not just haikus and hanami, honorifics and old castles, pop culture and the arts; anything created within its borders can incorporate elements that give Japan a cohesive national identity, but they can never hope to completely epitomize and encompass all that Japan is and what it stands for because it is entirely relative. Novelists in the US have the same predicaments known as "the Great American novel." Everything from The Catcher in the Rye to To Kill a Mockingbird to Of Mice and Men incorporate elements of what the individual authors and many readers perceive to be America and American, but they can never conceivable describe the entire experience because it's larger than one person and, again, thanks to globalization, even one culture. The same goes for games made in every region, Japan included.
I admit that I am perhaps not the most objective person to have this sort of discussion about the Japanese gaming industry with; I speak the language, have lived and traveled in Japan, and intend to return for further university study in the relatively near-future. Japan is, from my experience, both everything and nothing that people make it out to be, so if I seem so insistent on not accepting the cultural argument, it's because those are my personal beliefs from actually being there. I can't expect everybody to agree with them, even people who have or are living there, but since I only speak for myself, I am comfortable with positing those ideas.
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