They are capable, but market forces were creating a monoculture which made it harder for them to make them, and some people voiced their concerns regarding this phenomena. (The regular systemic inequality problem, which means the status quo is hard to change, because the advantages/disadvantages are propagated.)

Okay, and how big the videogame representation aspect of this problem is? Yep, good question, but even if it's small, it doesn't invalidate it.

That's really not the point; Ghost of Tsushima is based in Japan with Japanese and Mongolian characters but was made by a US developer.

Some of the stuff outside the game was amusing. There were all these white progressives complaining about cultural appropriation, on one hand, and on the other a bunch of Japanese people celebrating how awesome the game was.

Yeah lets just racially segregate game development.

That is not at all an answer to the question. But if you have an answer, I would like to read it.

No thanks.

This comment is being downvoted, but I'll reply to it.

In the 90's there was a short-lived company called Motown Software (who's parent company was Motown Records), created to make video games for African-American players. They released two video games: Bebe's Kids and Rap Jam: Volume One.