My opinion (which I feel is neutral, I hope):
A)
It's not so much that he's right because Japanese developers are "behind" their Western counterparts, as it is their consumers are. Sad thing about Japan is, it seems like many people have got themselves stuck in certain gaming niches. Although many countries are this way with some games, due to the Japanese consumer base being smaller than US/NA and PAL userbases, the problem is magnified. Like Naz mentioned, you have some great, unique Japanese RPGs like Odin Sphere, or games like Okami. Problem is, they don't do too well, forcing Japanese developers to rely on what they know will sell well, rather than what they want.
B)
It's not that Western developers, in my eyes, are any better than Japanese developers. There's this whole "percieved" idea that Western developers have somehow evolved into the mega-powers that they are in so many genres, within the past few years. This idea couldn't be more further from the truth. The truth is, that Western devs have always been incredibly innovative, smart, and producing unique games and genres - Sierra, Blizzard, Westwood, and Interplay were 4 huge developers in the 90s that put out some of the best American content the world's ever seen. Thing is, none of them were Console developers, and focused almost entirely on the PC market. Now, with the merge of PC functionalities, lowering profits, and changes in market trends, they've gone to consoles: always creating great, unqiue games, but now the likes of Nintendo and SquareSoft are feeling the brunt of their power.
So now we live in a market that the big N, Sega, Sony, and Square Enix are having to vie for a marketshare that likes diversity more (whereas Japan doesn't either have the capacity to, or is too traditional to) and allows for greater freedom in gaming trends - that garner profits for the developers to do what they do.
And that's what's making these developers finally notice the power of American and European developers. They've ALWAYS been there. They've ALWAYS made great titles, but the Japanese haven't always seen the titles.
Merely because, go back to the mid-90s and think about the greatest games ever built:
Warcraft
Command & Conquer
Red Alert
Diablo
Betrayl Series
Baldurs Gate
Fallout
Sim ****
Civilization
Falcon
Grand Theft
Alpha Centauri
Deus Ex
How many of those top-tier games recieved the good console treatment in their glory years? Answer: Very few, if any, until the Xbox and Playstation 2 began to change the whole trend in cross-compatability.