Holy shit! I'm actually writing something here??? This year (2014) at E3 Nintendo pretty much won by default. They didn't do anything that impressive or announce anything that surprising, they just seemed to actually care about making games that looked fun while everyone else was trying to be as AAA as possible. That's not to say that there aren't a lot of non-Nintendo games I'm looking forward to, but Nintendo was the only one that actually seemed to take E3 as an opportunity to make their games look like things that would be fun to play.
Nintendo also won with female representation in their games but once again this was by default. While Nintendo had a bunch of games where you could play as Women, almost no one else had anything. Microsoft showed Tomb Raider and Sony showed a DLC for Infamous but that's really about it. Meanwhile Nintendo had a new character in Smash Bros (to add to the many that are already there), Bayonetta, more playable women in Hyrule Warriors than men, random characters in Xenoblade and random characters in that ink game. The thing is none of these are really great but the fact that it's SOMETHING is still better than the whole lot of nothing that everyone else was giving.
The thing is, I would argue this works out better for Nintendo right now because all the games that were shown that had women have the choice to NOT play women. They were all games that weren't centralized around a central character so they don't really risk alienating idiots, just bringing in more people. The other companies tended to show really plot driven, single player stuff and they can really only focus on the one character. In the game industry if given the option, they will usually go with a man. Why? Because gamers are awful.
For many gamers, they are trying to feel like they are the character they are playing. They are putting themselves in the characters shoes and therefore don't really want to be forced to do stuff they wouldn't do. Gamers get really mad at Mass Effect because in the end there was no option to do what they wanted. Making your only character a woman is like this but instead of not letting you just kill the Reapers, they're making you kiss a boy.
This is not what some gamers want at all. They want to go in the role of a strong dude that women love. They don't want to be a woman. Who says they want to be a woman? Are you calling them gay? Well maybe you're gay!
...Sorry, where was I? Some people play games to live through a fantasy world and no part of that involves playing some girl.
There are exceptions of course. Take a game like Tomb Raider. They get around it by just sexualizing the crap out of the character. They replace one fantasy with another. They sacrifice putting themselves in the game for watching the game jiggle. Even in the latest Tomb Raider, while they tried to improve things in many ways, the game was still full of really male gazey camera angles and alot of comments I heard about the game talked about "protecting" Lara rather than playing as her. People still found the way to be the big strong man in the game where they played a woman. Lara is also pretty sexless. Like sure she has massive breasts and wears ridiculous outfits, but she never really shows interest in the opposite sex (they even changed a scene from the original when they remade it). They make it so there's no one in the game to get between the player and Lara.
Then there's games like Saint's Row which in many ways seem pretty progressive (no one cares if you get a sex change!) but they're really just an example of women as an optional character. It's fine to have women if you have the option to NOT be a woman. That way you can put that aspect in the game and people that have a problem with it can just ignore it. While some things come off as really progressive with the boss in Saint's Row, alot of it is just them being kind of lazy because it's much harder to write new dialogue. In it you still can't have a male love interest and hell you still pimp and get lap dances from only women no matter what gender you play.
Male is just the default in the industry because they know women will put up with playing men, but some men won't put up with playing women. I mean even in shitty mobile games you'll start with a dude and if you want to play a girl, you have to earn some currency first.
The thing is I don't think the percentage of gamers that care is actually that large but it's enough that they're still catered to. Today someone from Ubisoft said making a female character would take way more time and there's either two things he meant. He either meant it would take more time because there are certain plot things they'd have to work around because they need to keep in mind their audience or they meant it would take more time because they could only really put it in as an option rather than the sole character. Either way they're doing this because they think their audience is made up of pretty horrible people.
[side note: or he could have meant that it would take more time to animate all the pretty dresses said character would wear and if that's the case, that just makes me want a female protagonist more]
Really though the obvious elephant in the room is still just misogyny in gamers. The fact that people care about this is just sort of ridiculous and the fact that the industry caters to these people is even more ridiculous. It's hard to know what to do about it though. You could buy games with female protagonists but I mean the whole problem is that those are few and far between and sometimes those games are just bad anyways (oh Remember Me...). Even if you buy these games it's hard to really know if you're message is getting through. Talking with your wallet is hard because it never really sends a clear message as to why you did it). Still, short of actually getting into the industry and getting trusted with money to do with what you want, it's all we really got.