For decades, the term "youge" (洋ゲー) or "Western game" was pejorative. In Japanese, "you" (洋) is used to denote Western things, whether that be "Western music" (洋楽) or "Western clothes" (洋服). These words are not pejorative—not like youge has been.
"Even now, there have been people in Japan using the label youge- (Western games) with a terribly discriminatory meaning," Square Enix president Yoichi Wada said in 2009, while playing Modern Warfare. "I'd like them to try it once. If they play it once, they'd realize how incorrect that label is."
It looks like that label is changing—slowly, but surely.
Japanese game magazine Famitsu recently published the results of its 2010 reader poll for the best games of 2010. Number one was not a Japanese game, but a Western game: God of War III. Number four was Red Dead Redemption. Number seven was Halo: Reach.
The poll ranks the favorite games of Famitsu readers, not necessarily the best selling.
As discussed on the 8-4 podcast, number two was Monster Hunter Portable 3rd, which you'd think would be numero uno given the game's popularity in Japan. These are not your typical Japanese gamers, though. They're the kind of people who respond to Famitsu polls, so they might not be representative of Japanese gamers as a whole. They do shed light into trends and emerging mainstream tastes.
The rest of the top ten is peppered with what one would expect—games like Tales of Graces F (number 3), Kingdom Hearts: Birth by Sleep (5), Super Robot Wars OG Saga (6), Yakuza 4 (8), The Legend of Heroes: Zero no Kiseki (9) and Wii Party (10).
This isn't exactly a new trend, but an increasingly consistant one. God of War II broke the top five in the 2007 survey. That same year Gears of War and Grand Theft Auto: San Andreas broke the top ten—something they didn't do the previous year. In 2008, Fallout 3 cracked the top five, and Grand Theft Auto IV broke the top ten. In the 2009 survey, Gears of War 2 came in at number one, while Uncharted 2: Among Thieves was number seven.
In Japan, Western games do not sell anywhere near their hometown rivals. One day, however, that will change.