Tons of baseless statements in this thread by people who think they know "Japanese culture" or whatever.
Truth is, Japanese game developers could learn a lot from first-person games like Half-Life 2 and Bioshock. Your typical Japanese story-based game is overly talky, meandering, and, well, not very immersive. By contrast, many first-person games (especially the two I listed above) utilize one of the medium's biggest strengths - multimedia sensory immersion, combined with full player control over a "blank-slate" character - for storytelling, and it works wonderfully. Well, perhaps not always wonderfully, but a good deal better than your average wordy Japanese game.
Another aspect of first-person games that helps in that area is that, in the majority of first-person games, you are the character. Or, at least, you're supposed to empathize with the character. Your field of vision is perched at eye-level, you can see "your" hands (and sometimes the rest of "your" body), and when you're hit, the screen often flashes red, or perhaps "you" stagger a bit from the pain. This is just a hypothesis, but perhaps Japanese people can't empathize yet with that sort of immersion. They may still see games as more akin to books - something where you view characters, rather than become them. (This would also explain one of the major divides between Japanese and Western RPGs, with the latter often offering many more dialogue choices.)
I may not be correct, but I find that answer to be a hell of a lot more convincing than many of the "Japanese are superior, of course they don't like our lowly baka gaijin games" replies to the OP.
