Or any games really?

I used to play Yu-Gi-Oh and without fail over 1/2 of the popular cards' Japanese names are just katakana of English words. Stuff like "ライトパルサー・ドラゴン" for "Light Pulsar Dragon". It's the same of Pokemon moves. Half of the new moves are "マジカルシャイン (Magical Shine)". Do the videogame makers assume that every Japanese teenager speaks English as a minimum requirement to play these games?

Imagine if when you tried playing a videogame 1/2 of the words were from Arabic, but just transliterated into the Latin alphabet. At least that's how I picture this. Are most games like this?

Yes, video games generally use lots of katakana terms. People are familiar with these type of terms because they show up in a lot of entertainment. If they don't know them, they can just see them like made-up words in fantasy novels. Also, you don't have to know the English words since they're in katakana, and even if you don't know them at all you can still see what the abilities or weapons do from the descriptions and stats in the game.

It was the same phenomenon in France, at least back in the days, most games were only partially translated and place / monster names spell and abilities were often left in english.

And from what I remember, yudantaiteki is right ; it sounded mostly like made-up words to us, and actually added that little bit of mysterious feeling to the game... not to mention that we were usually pretty good at remembering vocabulary from video games, for some reason, it stuck with us much more than boring textbook vocab lists :p

I imagine it sounds the same to them as hadouken, tatsumakisenpuukyaku, and all the other Japanese Street Fighter move names sounded to us, only perhaps not as obscure as they are much more used to them.

I think the closest analogue would be all the Latin and Greek used in fantasy novels in English. Sure we learn some Classical roots eventually, but until then, it's just a weird word. If I remember correctly, English is a required subject in Japan (can't remember if it starts in junior-high or highschool), so they'll probably learn something about it at some point, but probably not before they've been exposed to all those words as weird fantasy words.

Use anime as an example. Except for those that have been heavily localized (think shows like Pokemon), a lot of anime (dubbed or the subtitles), keeps a lot of the japanese names for characters, techniques, place names, etc. If you ask your average fan of, for example, Bleach, who doesnt know any Japanese at all, to give the names of the main characters and their favorite attacks, chances are they will give the name without much trouble, and probably with decent pronunciation as well (at least relative to the media they first watched it on).

Another example might be the old TNMT games or Ninja Gaiden games. A bunch of the words used are Japanese (sai, kitana, shuriken, ninja, and so forth), but most people have had enough exposure to them that they don't pose any real difficulty.