I never heard of monster hunter, but now I kind of want to play it, lol... I really liked Lost Planet 1, and thought that 2 was a very good sequel to it. Could have done with more campaign content, and a few tweaks, but in general it was one of my favorite games this year, though not better than FFXIV... Probably 2nd to it though. :P
Then again I'm a niche gamer. Anyway, point is, I don't think japanese games are behind, I just think mainstream western gamers are after certain elements in their games that japanese gamers/developers have never really been interested in. Personally, I hope they don't start chasing those elements, they probably won't get them right, and they will just end up messing up what they already do right.
Instead, they're better off just innovating on their own terms, and ignoring what the western companies are doing. Too many games are already molded after CoD and GTA, which are both very bland games imo. But at the end of the day, markets and industries are really just too complicated to even talk about without isolating parts of it and neglecting massive branches that probably tie in. You just have to kind of let them go, and take what you get from it for what it is. Leave the more elaborate discussions to the people getting paid to have them.