Monster Hunter is humongous in Japan, but only in Japan. This faux news broadcast produced by Capcom attempts to explain why Monster Hunter is a hit. Monster Hunter is a social game and the video clearly explains this.
Part of the reason why Monster Hunter caught on in Japan is because its a portable social game. Space is scarce in Japan so it’s more common for friends to meet up in town. Groups of gamers can’t lug an Xbox 360 and set it up in a public place like McDonalds. However, they can bring PSPs and lounge around for hours hunting monsters.
Domestically, Monster Hunter has to compete with console multiplayer games that are in arms reach when visiting a friend’s place. To make the social aspect of Monster Hunter a hit here Capcom has to convince the West that Monster Hunter is just as fun as a console game and/or promote up Monster Hunter meet ups.