Isn't the reason obvious? What would someone like to play more: Playing as their country killing others or another country killing fighting the player's country. I think the answer is obvious.

For Japan using only whites it's becuase A)This is how they view themselves (somewhat) or that what they wish to look like. For the US it's probably becuase most of the developers are white, in the same way women are objectified.

And then someone will complain about stereotypes.

The US is the biggest market.

I always found it strange that Japanese games predominately feature white characters.

Carl Johnson - GTA SA

I'll take this moment to point out that the supposed "Aryan race" originated from modern Iran. It's a foolish stereotype (and one that shows a distinct lack of historical knowledge) to assume that all people of Middle-Eastern descent are dark-skinned with thick black hair and a large nose.

Being that they only represent (roughly) 1.5% of the population of the United States of America why do so many American movies and television shows have so many Jewish characters?

The fact is that the people who make the content (like videogames, movies, music and books) tend to make content which appeals to themself. (For a wide variety of reasons) Jewish people are dramatically over-represented in the entertainment industry and therefore you see their stories being dramatically over-represented in the content they create.

As stereotypical as it sounds, the vast majority of game developers are white or asian males who are between the age of 25 and 40 who were raised in North America or "Western" European countries ...

The shocker will be if white is main character in Afrosamurai.

The answer is yes, 99% of video games are white to pander to white audiences.

Those mentioning SE games and Anime, you are wrong. Japanese character design features very Asian looking characters. In fact compare Tifa from Advent Children to a 20 y/o Caucasian and a 2 y/o Japanese Female. You are so stuck on pigmentation. Just because the skin is fair doesn't = Caucasian. Japanese people also have very fair skin when compared to Koreans and Chinese people.