This Mortal Kombat character in particular can't come out of the closet due to backlash, on which Raiden replies that he should not care about it at all.

I didn't really mean Motal Kombat. Never heard of anyone playing Mortal Kombat for the story. I meant an actual story-heavy game. The details of this Mortal Kombat game made me think about how it would be interesting to have a side-story/side-quest in a story-heavy game in which coming out of the closet is done realistically with positive and negative feedback from different characters. 

I might be wrong, but I think that happens in Persona 4.

Kanji's sexuality is left ambiguous, but it's heavily hinted that he's gay as his shadow is. It's probably the closest we've come to a coming out story in video games, though.

I actually forgot about Persona 4. Thanks for reminding me. I thought it was interesting how much of a focus there was in regards to "masculinity" vs. "femininity" in that particular plot-line of the game. Still the game, despite being much better than others at its portrayal, did play too much with stereotypes, juxtaposing two frequent ones in a common paradigm and kind of marginilized said conflict to a particular sexuality (heterosexuals also struggle with masculinity vs. femininity, they didn't have to imply - although it was left ambigious -  that Tatsumi was homosexual to get their story across.) For me personally, I think the best way to show a gay/lesbian/bisexual/etc character is to show how insignificant of a matter it should be unless you are his/her partner(s), while also show how people characturize it as something more important than it is, both heterosexual and non-heterosexual alike. I like to think that one's personality is MUCH, MUCH greater than just one's sexuality. I don't think that people should shy away from exposing critical views of homosexuals in games either, as it is unrealistic to show only positive reactions.  Persona 4 did that latter point very well. Of course that is just my particular view of it. I'm certain others will feel differently. I know many people who like to make sexuality a culture or a very strong part of their identity. For me, it is one of many parts of what makes me, me. 

Not true at all 

It's mostly due to how the kinsey scale works. A somewhat decent portion of people who are "bisexual" (2,3,4 on Kinsey scale) likely consider themselves straight or gay. 

http://en.wikipedia.org/wiki/Kinsey_scale

About 11% of people are a three (bisexual with no preference.) 

http://en.wikipedia.org/wiki/Kinsey_Reports

• Men: 11.6% of white males aged 20–35 were given a rating of 3 for this period of their lives.^[22]
• Women: 7% of single females aged 20–35 and 4% of previously married females aged 20–35 were given a rating of 3 for this period of their lives. 2 to 6% of females, aged 20–35, were given a rating of 5^[24] and 1 to 3% of unmarried females aged 20–35 were rated as 6.

What you have is 85% straight, 5% gay and 10% bi. 20% straight? Not even close.

20%+ of people are  a 0 + 1 on the Kinsey Scale, is what is being said. But I'm sure another 10-15% are a 2, which is bluring the lines between "straight" and "bisexual." I guess it depends on what you consider "straight." I personally don't consider somebody who is "more than incidentally" homosexual/heterosexual to be straight/gay. I consider them bisexual. But I know many people who would think that if somebody prefers the opposite sex they are straight, prefers the same sex they are gay, and there is no such thing as bisexual except for the percentage of people who like both sexes equally. You are perfectly able to provide a study that says otherwise. 

What do you mean that you're "sure" another 10-15 chose 2? Where do we see that number to know it's not 30 or 60 or 70%?

Also for reference his studies are incredibly small in comparison to far larger ones with far better sampling and totally different results. His methodology amounts to junk science:

There have been serious criticisms pertaining to sample selection and sample bias in Kinsey's research. In 1948, the same year as the original publication, a committee of the American Statistical Association, including notable statisticians such as John Tukey condemned the sampling procedure. Tukey was perhaps the most vocal critic, saying "A random selection of three people would have been better than a group of 300 chosen by Mr. Kinsey." [2]. Criticism principally revolved around the over-representation of some groups in the sample: 25 percent were, or had been, prison inmates, and 5 percent were male prostitutes. A related criticism, by some of the leading psychologists of the day, notably Abraham Maslow, was that he (Kinsey) did not consider the bias created by the data representing only those who were willing to participate.

Kinsey’s work didn’t improve in his volume on women. In fact, he interviewed so few average women that he actually had to redefine “married” to include any woman who had lived with a man for more than a year. This change added prostitutes to his sample of “married” women.

In the December 11, 1949, New York Times, W. Allen Wallis, then chairman of the University of Chicago’s committee on statistics, dismissed “the entire method of collecting and presenting the statistics which underlie Dr. Kinsey’s conclusions:’ Wallis noted, “There are six major aspects of any statistical research, and Kinsey fails on four.”

Kinsey claimed, for instance, that 10 percent of men between the ages of 16 and 55 were homosexual. Yet in one of the most thorough nationwide surveys on male sexual behavior ever conducted, scientists at Battelle Human Affairs Research Centers in Seattle found that men who considered themselves exclusively homosexual accounted for only 1 percent of the population. 

In 1993, Time magazine reported, “Recent surveys from France, Britain, Canada, Norway and Denmark all point to numbers lower than 10 percent and tend to come out in the 1 to 4 percent range.” The incidence of homosexuality among adults is actually “between 1 and 3 percent;” says University of Delaware sociology and criminal justice professor Joel Best, author of Damned Lies and Statistics. Best observes, however, that gay and lesbian activists prefer to use Kinsey’s long-discredited one-in-ten figure “because it suggests that homosexuals are a substantial minority group, roughly equal in number to African Americans — too large to be ignored.”

Kinsey’s homosexual sample provides another illustration of the problems in Kinsey’s dataset. Because of the difficulty in finding homosexuals in the repressive atmosphere the time, Dr. Kinsey relied on interviews with members of homophile groups such as the Mattachine Society and homosexual communities in a few large cities. He also interviewed prisoners and institutional populations...