I remember the moment I realized what the Wall Market section of Final Fantasy VII would actually entail. I was thirteen, and I nervously checked to see if anyone else was home.
Being trans brought with it this odd sense of obligation to protect a secret that at the time I wasn't even aware I had. Looking back, it seems a little ridiculous, but I really was afraid someone could glean something like that about me, just from playing a game where the main character is forced to crossdress.
There is no single, universal trans narrative, but for most trans people, it takes quite a bit of our life before we're able to conceptualize our experiences in the same way we do once we've come out to ourselves. I didn't conceive of myself as "being a girl" as a child; I didn't know that was possible. I knew, at the time, that I deeply wanted to be a girl, but I had no idea what that meant, and I had a vague but persistent notion that whatever this feeling was, I shouldn't acknowledge or discuss it. I know now that I was a girl, but that understanding and framing only came much later.
Crossdressing is most certainly not the same experience as being trans, but strict expectations about gender conformity and "acceptable" expression absolutely do affect trans people. Many of us live a significant portion of our lives believing the lie society tells us, that our assigned sex is "who we are", and as such may mistakenly interpret our own choices as "crossdressing", only later able to realize what was truly going on.
Positive portrayals of both crossdressing and trans characters in games are becoming more and more common, even just within the past year or so. A recent Guild Wars 2 patch added a trans woman character. At E3, footage of The Legend of Zelda: Tri Force Heroes showed hero Link wearing a "Zelda dress".
This wasn't presented in a judgemental way, far from it—a fundamental mechanic of the game is acquiring new outfits to use new abilities. Link's wearing a dress isn't played for laughs; it's just another outfit he can use to progress. It's heartening seeing an explosion of art from fans not just accepting of this, but excited and ecstatic about it.
There have, unfortunately, been a good number of missteps along the way as well. Many players were excited that clothing wouldn't be restricted by sex in Fallout 4, but the trailer played "man in a dress" for laughs.
The trailer starts with the man asking his dog if he's "ready to fuck some shit up." We then see brief footage of the character in a dress, played against the apocalyptic landscape and inserted between rugged, expectedly masculine outfits. The joke pretty clear: a man in a dress is being impractical, frivolous and certainly not the sort man one would expect to be able to "fuck shit up." Thankfully, this was just in the trailer, and without quite the same framing, the crossdressing should be able to exist as more than just the butt of a joke.
Worse examples than just this have popped up, however: earlier this year a trans woman discovered a clearly transphobic joke written by a Kickstarter backer that made it into Obsidian's Pillars of Eternity game.
It felt appropriate to petition the company to remove the content, which had no real redeeming value other than punching down at a marginalized group for the sake of cheap laughs. It wasn't part of an ongoing plot, it had nothing to do with the development of the characters, it was just a contextless epitaph about how shameful it is to be "tricked" into sleeping with someone who is "really a man." Thankfully, Obsidian agreed, and worked with the backer to replace the epitaph.
Our attitudes and our ability to have conversations about gender expression have evolved quite a lot since the original launch of Final Fantasy VII, and since the announcement of the remake, there's been a lot of discussion about the crossdressing and how it should be handled. Trans people's reservations about the scene are not spurious or unwarranted, but given the context of the scene, I believe petitioning the developer to just remove it wouldn't be the right answer. It's not the same situation as Pillars of Eternity, and I'm worried about people desiring too blunt a solution to a problem that may not warrant it.
The scene in Final Fantasy VII starts after a mission goes awry and Cloud is separated from some members of his party. While he's with his new friend Aeris in the slums of Sector 6, they spot Tifa, one of the missing party members, riding a carriage to the mansion of famous brothel manager Don Corneo. Though you're meant to try to rescue Tifa, you quickly learn no men are allowed in the Don's mansion—but Aeris presents Cloud with a solution.
At first Cloud is resistant to the idea of dressing like a girl, but as the player you undergo a series of quests to acquire the right accessories to be a convincing one. At the very least, you're required to collect a dress and a wig; additional items include a cologne, tiara, and undergarments. The specific combinations can result in Don Corneo picking either Tifa, Aeris or Cloud to come with him to his bedroom. Getting the Don to choose Cloud is actually the most difficult, requiring you to win the mini-games and make the most optimal choices as you navigate Wall Market looking for precisely the right items. "Winning" the entire ordeal means, functionally, making Cloud play the best woman you can, and this is rewarded with an extra scene.
To get the dress, you have to locate the father of a clothing store in a bar. You learn he's become disillusioned with "making regular clothes" after Aeris explains that Cloud's "always said that just once, he'd like to dress up as a girl." He's surprised initially ("What?! A tough lookin' guy like that?") but quickly agrees to the challenge. You're allowed to pick from a dress that's "clean" or "soft", and one that's "shiny" or "that shimmers" (you want a Silk Dress, the soft one that shimmers).
After getting the the dress made, Cloud tries it on in a dressing room but Aeris thinks something is missing, and agrees he needs to find a wig. The shop owner explains that at the gym, you'll find "a lot of people there like you" who can help you out. You compete with one of the gym-goers at "Big 'Beautiful' Bro's" insistence by attempting to do the most squats in 30 seconds: depending on if you win, tie or lose you'll acquire a different tier of wig (you'll want a Blonde Wig—a 'dyed wig' if you tie, or a 'wig' if you lose, won't be ideal).
A few smaller tasks are completed for the cologne and tiara. The ordeal for the undergarments is probably the strangest of the bunch, however: the "Honey Bee Inn" brothel that supplies Don Corneo with the three women he chooses from every day has a series of rooms you can choose from. Cloud can get suitable underwear from either the "&$#% Room" or the "Group Room," both of which are implied to be rooms where women are hired to spend time with men. But surprisingly to the player, although different events happen in each room, it's always muscular men that join.
In the &$#% Room, Cloud hears a voice in his head asking him what he's doing in this kind of a place, and he passes out. He wakes to muscled men (presumably) massaging him back to consciousness, acknowledging that he must have been uncomfortable with the "adult things" that are going on in the Inn. In the Group Room, the men invite Cloud to "wash off our sweat and dirt together." All of the men strip, and the camera shifts up so you can only see their heads as they all get in the hot tub. Mukki, one of the men, asks, "How is it, bubby?! Feels good, huh?" but Cloud is only able to respond with silence or "It hurts."
This has been read by various people as either referring to the hot tub itself perhaps being too hot, a too-intense massage or sexual assault. Regardless of your choice of dialogue, Cloud responds by saying, "I don't feel good. Let me out…" Mukki just insists Cloud will get used to it, and asks him to count down from ten slowly.
It's the most unfortunate part of all of Wall Market; the recurring joke throughout the crossdressing ordeal is Cloud's (and, presumably, the player's) discomfort—that the challenge, in a sense, is to endure that discomfort for the sake of others. These rooms stage the first instances where Cloud expresses his discomfort and it's paved over; in the Group Room, he explicitly vocalizes his refusal and it isn't really respected. For a lot of people, this optional scene is what shifted the tenor of the Wall Market sequence from goofy humor at Cloud's unfortunate circumstances to the game portraying the gay men as predatory and creepy.
It partially taints not only one of the few representations of a group of queer characters in a game that old, but also paints crossdressers similarly by association as well; these men, after all, are where Cloud acquires the bikini briefs for his mission to infiltrate Don Corneo's mansion.
Cloud goes back to the dress shop and changes, becoming "Miss Cloud." Aeris continues to flirt with him, and the shop owner thanks both of them for giving them a challenge that renewed his interest in making clothes; his initial surprise at learning Cloud wanted to dress as a woman has long since worn off, replaced by unguarded enthusiasm.
After gaining access to the mansion, you're reunited with Tifa and quickly catch up before all three are called up for Don to choose from; assuming you acquired the right items, "Miss Cloud" is selected and you join Don in his room. He acts as lecherously as you were led to expect, and you're given the choice of either flirting back or acting indifferent. After he asks Miss Cloud for a kiss, Aeris and Tifa break in and Cloud reveals himself as a man before all three take turns threatening to do various things to his genitals to extract information from him about ShinRa.
As imperfect as the entire thing was, Final Fantasy VII's crossdressing does not fall into the same trap as Fallout 4's trailer: the joke is not simply that there's a man in a dress. Throughout the entire ordeal, Aeris follows you and is excited, flirty and encouraging. People in the town are occasionally surprised, but never overtly bigoted or hostile. Other people in the area crossdress, it isn't a secret, and they're accepted among their friends.
The joke, in the case of VII, was Cloud's (and, by extension, the player's) sense of discomfort despite there not being any real reason to be uncomfortable in the first place. Discussions about the negative aspects of VII's portrayal of crossdressing—the stigmatization of other queer characters, the way Cloud's boundaries become a joke inside the brothel—are important and necessary. Nontheless, even two decades later, there are things about Cloud's crossdressing sequence in Wall Market that I think Final Fantasy VII got right—and that modern games are still getting wrong.