Interesting article that talks about this issue. A snippet to start:
Video game heroine Lara Croft is an adrenaline junkie unafraid of getting bloody. But in Germany, the buxom starlet of the ``Tomb Raider'' series doesn't bleed -- even if she's being mauled by a tiger.
Although the $25-billion video game industry is global, the games themselves aren't. They reflect the distinct cultures and traditions of different markets, and game publishers carefully tweak their titles to tone down offensive material.
Red blood in a game sold in the United States turns green in Australia. A topless character in a European title acquires a bikini in the U.S. Human enemies in a U.S. game morph into robots in Germany. Violent sex scenes in a Japanese game disappear in the American version.