There was maybe an argument to be made at one time where if you wanted to tell a more serious story in a game, having campy over the top sexy women might undermine that tone, but that doesn't mean go in the other extreme and make all women ugly box shaped androgynous goblins.

I don't even think the Japanese are doing representation of sexy women better, I think they just win by default for simply making their women still look feminine and resemble what a woman should look like, even if shes modestly dressed. Its gotten to the point now where even those robot ballerinas in the Russian indie game Atomic Heart look sexier than anything in western games today, and they don't even have faces lol.