He's right. Otaku have been demonized in Japan, mainly because of Tsutomu Miyazaki. He damaged the reputation of the otaku in Japan, much like how Frederic Wertham did for comic-books in the US (only comics survived).
A less derogatory word, though, is "mania" (pronounced "MA nee ah"). When I talked with Gainax co-founder Hiroaki Inoue, he called me a "tokusatsu no mania," and of course, he meant it in a good way. I guess "mania" is more acceptable than "otaku" in Japan . . .