Xbox 360 Has Failed in Japan - So What?

There was a time, in the dewy morn of Xbox 360's life, when
conventional wisdom dictated that "conquering" Japan was absolutely
essential for Microsoft to succeed globally. Indeed, Microsoft has spent
the last five years a-wooing Japanese consumers like some lovestruck
sap, all to little avail.


Now that retailers are pulling Xbox 360 from shelves, the feeling is that the game is up. But is this really such devastating news for Xbox 360? After all, the machine has failed in Japan, and yet is apparently untroubled on a global scale.


Here's the reality about Japan: Unless you're a Japanese company, it
doesn't really matter. According to one well-placed games publisher, who
chose to remain anonymous, "it constitutes 18 percent of the global
market for console games, but is declining at a faster rate than any
other major territory, it's not that games publishers don't want to be
successful there, it's just not a huge opportunity." Analyst Michael
Pachter described the country as "about as important to western
publishers as Scandinavia."

Microsoft did some really smart things as it attempted to win the hearts
and minds of Japanese consumers. It managed to win support from leading
developers (usually through the expedient of hard cash). It spent a lot
of marketing dough. It's difficult to see what the company could have
done better. But still it failed.


Japan has become less and less important to games industry spreadsheet
jockeys, as they plot their future revenues. The growing markets are in
Eastern Europe and South America, both of which are way more receptive
to Western cultural tropes than Japan and Asia. Put simply, they just
don't expect Japan to deliver much into their coffers.


Japan throws an extremely powerful cultural voice, and this makes it
more difficult for outsiders to break through. It's not that the country
is insulated or, as some would claim "weird", but that Japan creates so
much of what it likes, that it doesn't need to import culture. You
can't say the same about many other countries.


Japanese consumers are also prideful about their own brands. You don't
see many foreign cars on Japanese roads, and this is even more the case
in the games market where Sony and Nintendo are the local boys. Japan
will buy foreign goods, but not if the local fare is at least as good.


Not only, but the country seems to love portable games consoles more
than home consoles. Wii, the best-selling console of the current
generation, has not hit anything like the same numbers as PlayStation 2
and the PlayStation 3 has completely failed to come close to its
predecessors achievements. The last few years have been about DS and PSP
and mobile games.


Xbox 360 always had one hand tied behind its back, not helped by the
view - expressed by various commentators over the years - that the
console and the controller's form-factor are too vulgar and clunky for
Japanese tastes.


Microsoft is also not an entirely natural fit for Japanese gamers. The
company may be styling itself as the casual platform of the future, but
for most people, even in the West, Xbox 360 means Gears of War, Call of
Duty and very obviously Western-influenced yarns like the Tolkeinesque
Fable or Oblivion. Shooters are growing in popularity in Japan, but not
those with an obviously Western theme.


Michael Pachter, the well-known analyst, tells a funny story about this
one time when Activision boss Bobby Kotick visited Tokyo. "Bobby walked
into a games store and he was delighted to see a big pile of Activision
games, underneath a huge sign," retells Pachter. "He asked what the sign
said. An interpreter politely translated - 'Western Dogshit'."

Same as everyone else, they like what they like and they don't have much truck with the things they don't like.


But let's give Microsoft some credit. The company has sold over a
million units in Japan (estimated). It has won some credibility as the
console for super-hardcore gamers. In Japan, it's the machine for nerds,
and that can't be such a bad thing.


The Japanese experiment helped release Sony's stranglehold on Final
Fantasy and it helped to make Xbox 360 a solid host for decent Japanese
RPGs like Lost Odyssey. Xbox was even the exclusive console home for
massive arcade hit Idol Master, a coup that Sony and Nintendo would not
have enjoyed one bit.


Japan's importance for Microsoft must still be as a creative power-house
rather than a source of revenue. The company worked smartly to bring
Japanese developers on board. And even if Japan remains a marginal
destination for Western games consoles and Western games, it's still
been well worth keeping the country sweet. The company will keep trying,
may even make greater inroads in the future, but Xbox 360's fortunes do
not hang on Japan, and never really did.


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