I actually agree with you completely. I disagree with the article in that tastes in the two regions have diverged recently. That is BS. The tastes in the two regions have always been very different but big Japanese companies were still able to make their mark in the NA market regardless.
But what HAS changed this gen is that since Squaresoft became Square/Enix, the majority of games they put out now are not that good compared to past games - FF being a prime example.
As you have said, the innovation just isn't there. With the PS1 and PS2, Japanese devs ruled much of the top games with FPS still being the big NA genre. But years and years of releasing the exact same game (or clone) over and over, with little to no innovation in gameplay, storytelling, plot, etc has turned off even some of the biggest long time supporters.
I look at my own gaming habbits over the past decade +. My collection went from RE, SH, FF, MGS, JRPGs, Fighters to Open-world, action adventure, WRPGs, etc. My tastes aren't any different than they were in the past, but what HAS changed is my lack of desire to buy yet another RE game when the story hasn't changed one bit since RE1 and the gameplay took a drastic fall with RE5. SH has sucked, in my opinion, and while the first 3 are still some of my favorite games of all time, the others are not good at all. Square I already touched on, but other JRPGs are stuck in the early 90s. Why would I buy yet another JRPG when I can just plug in my past console and play the older version?
Meanwhile, as much as I liked MGS4, the whole series turned off tons of gamers with its crazy/wierd story and countless hours of movie watching instead of actual gameplay. And Devil May Cry has also gone from an innovative game to trash.
Finally, the NA audience has always loved FPS games and that is just a genre that Japanese devs don't seem that interested in because their own home market isn't.
Japan has always been about tradition. When those gamign traditions were first being brought over to NA in droves, back in the PS1/PS2 days, people were amazed. But that amazement quickly shifted to apathy as years went by and the game seemed to stay the same.
ZIMdoom
Give me break, you're talking about a couple of japanese companies that failed this generation with rehashed games (and rightfully so), but you're ignoring the other ones that succeded with quality games.
Just like I could single out the CoD milkage, how Bioware diluted the RPG genre (and now people don't even have a clue about what a RPG is) and uses the same rehashed back bone of a story (they haven't really changed anything since BG1) with a cliche infected plot, how western devs rely on shooters so heavily up to a point were they will change a well estableshed IP (X COM), or hell, maybe other people out there that aren't that familiar with western gaming are just thinking about Activision and Microsoft and generalizing thinking "this is western gaming".
Each side has its demons. But at the same thing, each side has its diamonds.
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