There is little doubt, I think, that Japan is still very isolationist in nature and that they are, generally speaking, a bit condescending toward other cultures. A lot of the manga I read, even serious, well-written works, will have very cliche and stereotypical foreigners in them. It's kind of jarring at times.
I think the same thing happens with Japanese game development. They try to appeal to western gamers but the idea they have of us in their heads is several degrees removed from reality. It especially ends up as a bit of a mess when they try to appeal to both audiences in the same game.
I'm going to disagree with him about Sony, though. Yoshida in charge of World Wide Studios and Cerny working on the hardware over in Japan, those have resulted in huge strides for the company. Even with Japan Studio, they have western developers over there in management positions.
Nintendo, on the other hand, both does a great job and a horrible job. When it comes to games, they understand that people are people and that trying too hard to appeal to each market is not necessary. Keep it simple and you can reach both without alienating either. It's on the business side that they've failed to understand the west.
Western games appear to be gaining in popularity over there, however, which I think is a positive.
