how is this still an issue?
What even is gender?
A person’s sex is what’s in between their legs, while their gender is the characteristics society aligns to the extremes of a spectrum representing masculinity and femininity.
In sociological terms, Ann-Maree Nobelius refers to ‘gender role’ as the characteristics and behaviors that different cultures attribute to the sexes. What it means to be a ‘real man’ in any culture requires male sex plus what our various cultures define as masculine characteristics and behaviors, likewise a ‘real woman’ needs female sex and feminine characteristics. 
This is a reasonable description, but is a huge issue in games and in the games industry. Think about the gender roles that are set by the intro to fallout 4. Before you edit your characters, you are a ‘default’ straight white male. After creating your character, you still have to be straight and you have a child. When you leave your house, everyone in your street is in a straight relationship and the plot device to get you to follow the main story is that they took your kid and killed your spouse.
In the previous two titles you edited your character before you got to see them, you weren’t forced to be a straight character at any point in time and ‘I have to save/avenge my family’ wasn’t your primary driving force to get you to follow any of the main story missions.
Sexuality and gender (identities) represented in games
Typically, family and relationships have been used as walking plot devices (Gears of war 2) or mechanics (fallout 4). If you don’t already start off with one, then you make your own by gifting a member of the opposite sex (fable) until you can complete their mini-game or side-quest (mass effect). Now that you have a spouse, you gain a bonus to your XP, or even an achievement for sleeping with them (Dragon Age Origins). 
There are only a few examples of gay and transgendered characters that have come from the mainstream games industry, such as:
Examples of Gay, Transgender or Cross Dressing Video Game Characters
- Poison –Final Fight
- Bridget– Guilty Gear
- Frank West/Chuck Greene– Dead Rising1 & 2
- Birdo– Super Mario Brothers 2
- Kaine– Nier
- Father/Mother– Zeno Clash
- Thomas– Deadly Premonition
- Zevranand Leliana– Dragon Age: Origins
- Gwindolyn – Dark Souls
These are not the best representations of their respective gender or sexuality though, as they are poorly portrayed, one dimensional characters and the only protagonist/main character examples are found in games with a character creator. They are only non-straight by player choice, not as a crucial part of the plot.
Robert Yang cuts the mainstream industry some slack as the climate is so risk-averse that it’s a miracle when they get to make something compelling, much less invest heavily in writing and narrative design. He speaks of the many industry people he has met who have much more radical design opinions than their stakeholders and customers will allow them to express in their work. However, there are just as many who are totally oblivious.
Yang concedes it is difficult to say whether or not games have succeeded in portraying non-heterosexual figures accurately, as the industry is still learning to tell stories with interaction. “Most game characters are still refrigerators with guns,” he laments. 
There have been large strides forward for creating multidimensional non-straight or non-binary characters by Bioware, including gay, asexual and transgendered characters and have been praised for treating them respectfully.
What’s the problem though
the problem is that there has been a history of awful representation, if any at all, which makes people feel unwelcome in the community and in the industry (and they really have been). This then contributes to a lack of diversity in the industry, becoming a recursive problem.
There is still an issue in the industry today, take a look at the promotional material for dead island riptide, tastefully named the ‘zombie bait edition’, which shipped as a limited edition in Europe and Australia. 
Much more recently though is the incident where a highly paid developer for Oculus crashed a queer developer party at GDC to get free drinks and mansplain how we are “beyond safe spaces”. 
WHY you should care
We are creators of media content. We have learned that there is immense power in media, enough to define and control cultural values. Even just supporting an ideal or creating a dialogue is enough to make a huge difference.
Tracy L. Dietz states that video game characters have the potential to shape players’ perceptions of gender roles. Through social comparison processes, players learn societal expectations of appearances, behaviors and roles.
Girls may expect that they be dependent victims and that their responsibilities include maintaining beauty and sexual appeal, while boys may determine that their role is to protect and defend women.
Thus, Dietz claims, the roles internalized by the child, including gender, become for the child, and later for the adult, a basis for other roles and for action. The gender roles internalized by young individuals have a significant impact upon their perspectives and the additional roles they assume in later life.
Feminine and masculine symbols are supposed to become a part of a child’s identity. 
It is proven that media has an effect on society, helping to form the rules of gender ( Gendered Marketing). We know that boys and girls colours used to be swapped, Lego was marketed to girls and the whole family before it was sold to just boys.
What you can do
Learn how to identify power structures. Who gains from there being specific gender roles? What about in games? What are the best ways to subvert binary gender roles and hetero sexual values in your medium?
Attempt to create socially responsible media. Don’t rely purely on tropes and binary genders. Most attempts in games to do this are only lacking thoroughly fleshed out character designs and games that do incorporate this like The Last of Us have performed exceedingly well.
Help promote and support diversity in your industry, by helping to create and respect safe spaces. Stand up against poor behavior and views against sexuality and gender.
Do your best to be a decent person and treat everyone equally.
Thankyou for your time.