First: the highly respected game review magazine, Famitsu, gave FO3 a 38/40, as high a rating as they've ever given to a non-Japanese game - the only other Western game to get a 38/40 was a little thing called Oblivion. So, open-world RPGs have definitely hit on something that deeply appeals to the Japanese market (or at least its respected critics).
Second: Square Enix, with its near-domination of the Japanese market, has recently been interested in expanding further into the western market: showing interest in acquiring Eidos, and trying to make games with western stylings, like The Last Remnant. But there may be some confusion as they try to figure out what makes Western RPGs appealing.
The tremendous success of Fallout 3 seems to have made a particularly profound impact on [Square Enix art director Yusuke] Naora. "When we make a game that sells two million copies, that's always seemed like a tremendous success for us," he says. "But now we hear about Fallout 3 selling four million in just a few weeks, and it really surprises us. This is a game that doesn't even look like what we in Japan consider an 'RPG,' yet it's incredibly popular."
"Until about a year ago, we'd never even heard the term 'J-RPG' to distinguish our RPGs from Western games," he admits. Now he seems determined to sort out the defining differences between the two schools of RPG design. Does it mean stronger female characters? A first-person perspective? More realism?
With great respect to my colleague, I feel he's looking at the wrong things for what I consider the fundamental difference between JRPGs and Western RPGs, which is simply this: player agency versus scripted progression.
The classic JRPG (any Final Fantasy being the prime example) is all about progressing through the story that the developers have made for you, while the classic WRPG (let's say, Fallout 1) is all about making your own way through a world of possibilities. JRPGs are usually much more tightly planned and polished compared to WRPGs' occasional confusion and bugs (particularly because open worlds are much harder to playtest), but WRPGs are forgiven those flaws because they allow the player to invest themselves more fully in the world and their characters' decisions, rather than presenting you with a single pre-set story as is all-too common in JRPGs.
It's a basic case of the design tension between the designer controlling the experience and letting the player control the experience, with Japanese and American RPGs taking strong stands on either side. How much of this is a difference in a game's influences? Could you argue that JRPGs try to present anime with the player as the protagonist, while WRPGs try to present a tabletop game with the player as the head of the party? Or is it a more intrinsic difference between tightly structured and organized Japanese culture and the more reckless and free American attitude?