Japan is just a symptom of Xbox' problems

The focus on miserable Japanese sales figures is a distraction; Xbox has problems everywhere outside the Anglo-American markets

However tough your job is today, spare a thought for Sensui Takashi. His job is selling the Xbox in Japan, which upon all the evidence thus far is a task not dissimilar to being a refrigerator salesman in the Antarctic, or a spokesperson for veganism in a lion enclosure. In an otherwise almost entirely un-revealing interview with Famitsu this week (Famitsu interviews generally being PR-directed puff-pieces of the first order), one note of frustration managed to slip through from the otherwise mild-mannered man with the games industry's worst job. "It's not like we're happy with the current state of sales," he told the magazine. He went on to say that the Xbox team will continue to do its best in a number of vaguely-defined ways, but the glimmer of annoyance was there. Sensui isn't happy.

Who can blame him, though? Xbox One's launch in Japan has been so mind-bogglingly awful that the world's media has effectively written it off as a meaningless dud already. Back when the Xbox 360 was giving the PS3 a kicking in the rest of the world, its poor performance in Japan was an object of curiosity. Now that the Xbox One is already an underdog, giving it a further kicking on the basis of even an eye-wateringly bad performance in a hostile market just seems unkind. The media isn't that keen to put the boot into Microsoft (believe it or not), mindful that the company is likely to remain a force in the industry for a long time to come.

"The Xbox did not fail in Japan, is not continuing to fail in Japan, because people here don't want to buy a product from a foreign company"

To put Sensui's comments in some context, though, consider this; the Xbox One sold half as many units at launch as the Xbox 360 did. In subsequent weeks, sales collapsed further, to the point where it's now selling about half as many units as the PS3 and the Wii U week to week (the Wii U being currently back in the doldrums after a pretty strong summer). It has yet to break 30,000 units sold overall. PS4, despite a late launch and a very slow ramp-up of interesting software for the local market, will soon hit three quarters of a million units sold.

"So what?" is a reasonable reaction, to an extent. Japan hates the Xbox. The failures of the console and its management in this market date right back to the era prior to the launch of the original Xbox, when miscommunication and mismatched corporate culture left Japanese publishers and creators cool on the idea of working on the platform. Japan may still be one of the biggest game markets in the world, but it's fallen off Microsoft's radar for the most part; it's notable that it took almost a year for Xbox One to even appear in this market.

It's frustrating, though, to see some of the lazy excuses which commentators concoct for the failure of Xbox in this market. The most common of them is that "Japanese consumers won't buy a console made overseas", implying that some kind of peculiar product patriotism leads them to automatically despise American or European products that compete with those from Japanese firms.

This is utter nonsense, as anyone who witnessed the enormous queues and boundless enthusiasm for the launch of iPhone 6 in Japan a couple of weeks ago can testify. Apple's smartphones utterly dominate the market here, much to the detriment of local companies like Sony and Sharp; their laptops and tablets do extremely well too. In plenty of other consumer product categories, from luxury cars (BMW and Mercedes) through to coffee makers (DeLonghi) and personal care products (Philips), western companies do remarkably well. If anything, overseas products carry a certain cachet among Japanese consumers. The Xbox did not fail in Japan, is not continuing to fail in Japan, because people here don't want to buy a product from a foreign company. It is failing because of something intrinsic to the product in question - something that simply doesn't appeal to Japanese consumers.

What might that be? Industrial design is part of it; the original Xbox and the Xbox One are particularly huge and while Japanese homes do tend to be small, that's perhaps less a factor than the general preference for sleek, unobtrusive industrial design over chunky expressions of power. Perception is a big problem for Xbox One, too; gamers are entirely aware of the console's negative perception overseas, so it doesn't even have the cachet of being a hugely successful system overseas to build upon. Software, though, is a much bigger factor. Many Western commentators have pointed out that Microsoft did work hard to bring some big-name RPGs to the Xbox 360 - what more could they have done, I've been asked - but that's not enough to sustain a console.

A console purchase is an investment for a consumer; they buy new hardware on the basis of belief that it will continue to entertain them for years to come. A single big game (Blue Dragon, Lost Odyssey, whatever) can only sell a console if consumers believe that there's more on the way; these RPGs, in contrast, felt like one-off "events", aimed more at proving to American consumers that Xbox 360 could do Japanese games than at selling consoles to Japanese consumers. Besides, not all Japanese consumers actually play RPGs; it's worth noting that the eventual low-key success of the Xbox 360 here (it did sell almost 1.7 million units in the end) came not off the back of these big-name RPGs but from the steady drip-feed of shooters, visual novels and various other genres which emerged as the console's life ran on.

"Xbox has a cultural problem, a laser-focus on Anglo-American markets that has left the rest of the world cold"

Overall, though, it's hard to pinpoint a single reason for the truly staggering failure of Xbox One in Japan. You know why? Because looking for that reason is entirely the wrong question to ask.

It's the wrong question because Xbox doesn't just have a problem in Japan. Look back at the Xbox 360, Microsoft's huge success story - it ended the generation neck and neck with the PS3, a massive reversal of the PS2 era and a great result for Microsoft. Those are global figures, though; break it down to regional figures and an entirely different picture emerges. Microsoft dominated the United States; it did extremely well in the UK. In the rest of Europe, in Japan and in most other markets, it got destroyed by the PS3 - a pattern that's being repeated with the Xbox One, except this time it's not even selling well in the US and UK.

We talk about Japan because Japan is a big market and it releases weekly sales figures to the public, so there's strong visibility of what's happening here. That shouldn't blind us to the reality of what we're talking about. Xbox doesn't have a problem in Japan. Xbox has a problem in everywhere outside the Anglo-American markets, of which Japan is only a part. The question isn't "why don't Japanese consumers buy Xbox?" - it's "why don't consumers anywhere outside the US and UK buy Xbox?" Focusing the discussion on Japan obfuscates this reality, allowing the apologists to creep in with their weird, 1980s-style "Rising Sun" narratives about Japanese consumers refusing to buy US products.

Xbox has a cultural problem, a laser-focus on Anglo-American markets that has left the rest of the world cold. In the last generation, the Xbox 360's remarkable performance in the United States was enough of a fig leaf to cover over its miserable performance outside the Anglophone world. This time around, the fig leaf has been snatched away. Even if PS4 wasn't overshadowing the Xbox One in its home market, though, the rising importance of non-Anglophone markets means that the oddly parochial Xbox was going to face a rough time this generation.

This isn't about Japan, whose game market is largely internally self-sufficient and focused on handheld and mobile titles; it's not even about France or Germany, stable, wealthy markets but not big enough to make a huge dent to global figures. This is about the rising middle class of swathes of countries across the world - a generation of teenagers across South and East Asia, South America and Eastern Europe whose families, for the first time, are in the market for luxuries. If Xbox cannot break out past its stubbornly Anglo-American culture and find a more universal appeal, its troubles in the first year of this generation will look like a storm in a teacup compared to the tempest on the way.

Image credit: AFP/Toru Yamanaka

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Latest comments (25)

Ron Dippold Software/Firmware Engineer 6 years ago
If MS couldn't win Japan with the X360, when PS3 was sh#$ing the bed with launch problems and arrogance and the X360 had Idolm@ster and all the momentum, they're certainly not going to be able to do it with the XB1, which is conspicuously lacking any compelling Japan only exclusives and they carry the stench of failure.

Now they're the ones trying to recover from a linen-fouling launch. I think your points are spot-on, but there's one more you missed: Kinect was inherently US English-centric, or at least delayed things quite a bit for localization. They've ditched that, but it's even more lost time.

I sincerely hope MS can pull this out for a respectable global showing, because if they don't Sony will turn into complete pricks again and we'll be right back to PS3 launch. They've got some really great exclusives (Sunset Overdrive) but it is looking pretty bleak on the wider front except for Below. C'mon Phil! I'm rooting for you!
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Jeff Kleist Writer, Marketing, Licensing 6 years ago
People read a great deal into the "Japan hates foreign products" thing, and take the wrong message away, which is again presented here.

It is a multilevel issue, and the X1 is not simple laser focused at English speaking countries. Much of Europe, particularly the gamer culture have a decades-long problem with Microsoft, stemming from the Windows monopoly cases of the 90's (fun fact, Apple is doing nearly all those things now, and no one says a word. That's why there's no legal third party DVD, or any Blu-Ray software, on OSX, because Apple refuses to give up the hooks MS was rightfully forced to).

Japan buys plenty of foreign products like mad, but the issue has many levels to it, some of which are practices that are illegal in the United States

1- it is legal in Japan to threaten retailers who carry the competition. Nintendo was prosecuted for doing this back in the 90s here. But it's legal in Japan, and definitely was used by Sony and Nintendo during the Xbox and 360 launches.

2- Japanese electronics manufacturers have spent decades eroding trust in foreign manufactures with fear campaigns about how they could just split on you at any moment. This is a fear that extends to many industries in Japan. Brian Ashcraft mentioned this was brought up during getting s home loan, despite having lived there for years and having a Japanese wife and child. With all the distrust of foreigners sticking around, you'd think they'd be shoving all those Nigerians out the door harassing people to come to their shady strip clubs :)

3- Consoles are dying in Japan. The PS4 isn't selling well compared to PS3 either. Combine that with the year delay, and the fact the console is region free. Preliminary polling shows that a large number of consoles have been imported by tech heads as well, which certainly eroded those already destined to be sad week one sales.

5- Microsoft failed to make minor changes that could allow it to succeed. Had they partnered with a Japanese company and let them take lead, included the TV tuner, a TB hard drive, a BDR, and marketed it as a DVR that plays games, it would be offering something the competition doesn't. A slick TV device that also plays games, and looks better and interfaces with your smartphone, unlike the domestic offerings. Which brings us to

6; Japan will buy if there's a perceived distinct advantage. They love Apple because the design, packaging and interface is very in the Japanese aesthetic. Same goes with Disney. They tend to be much more savvy consumers than Americans. They want something that lasts, that they can get fixed locally when it does break, and they are very much creatures of habit.

Every advantage the Xbox One offers is a non-factor in Japan. Streaming essentially doesn't exist. Broadband penetration in the home is some of the lowest in the first world, and they have an admirable attach,net to physical media. (tsutays, Japan's Blockbuster has an 8 story video store in the equivalent of the best spot in times Square). Media licensing is a living hell compared to the rest of the world. Every single program is typically owned by three or more companies. You can't just call TV Tokyo and pick up their catalog, if you buy a dozen shoes, then 40 or more companies may have to sign off on the deal (these factors are a big reason why Hulu tried and failed there, and why PLayStation TV has failed to ignite that aspect of the market as well.

Microsoft pays rent on shelf space in large retailers like Yodobashi camera to keep up appearances, and the used game shops won't take them in trade. And the flipping of all kinds of media is the lifeblood of the enthusiast in Japan. Microsoft is still there for one reason: saving face for the Japanese game publishers. It's simply a money pit for them, and pretty much always has been, and without a drastic change of every aspect of how they market it, as I suggested, it never will be.
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Thomas Dolby Project Manager / Lead Programmer, Ai Solve6 years ago
It should hardly be surprising that Microsoft isn't doing well. It certainly hasn't been showing any love for the markets outside the UK and US. There's a large swathe of non-game features that don't work in other territories, and when you have it on a pure games perspective the PS4 has the upper hand. It probably did nothing to help the situation when the PS4 reached other markets first as well, you already have the seeds sown for word-of-mouth advertising, people wanting to buy the same consoles as their friends etc.
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Show all comments (25)
if only there was a smaller form factor design for XB1
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Nick Parker Consultant 6 years ago
Microsoft invested heavily in a market it thought it could wrestle back from PlayStation - mainland Western Europe. It tried to change the adult male culture of the Xbox by launching more family genre titles on Xbox 360. It supported tactical retailer price drops which Sony could not match. At E3 2011, Microsoft stated that its biggest challenge was to improve market share in Europe - win there and you've won the world. What it couldn't weaken was the PlayStation brand strength which stood for everything Europeans, mainly southern Europeans, look for in a console (a multi-genre, cross-demographic games machine, sitting between the perceived extremes of Nintendo and Microsoft). It had taken Sony five years to build the PlayStation generation in the '90s and a further seven years to consolidate it with the PS2 and nobody was going to break it up.

The PS4 proves that there was a pent up demand for a PlayStation branded console at the right price, right games and with the right message (something we all know it failed with during the first two years of the PS3), even in the UK and USA.
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its fine, stop wasting assets and resources on the japanese marketplace, the world is a big place, one doesnt need the japanese market in order to be a financial success.
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Ben Herman CEO 6 years ago
[Ben, deleted your comment. We don't need that nationalistic nonsense here on, which is a global-focused website. Thanks, James]

Edited 3 times. Last edit by a moderator on 8th October 2014 1:41am

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Matthew Eakins Technical Lead, HB-Studios6 years ago
Thanks for your insight Ben. It reminds me of this article: Why Doesn't America Read Anymore.
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Roland Austinat roland austinat media productions|consulting, IDG, Computec, Spiegel Online6 years ago
Well written - and true from a German perspective of the video game market, too.

All those TV and media integrations that the XO featured here in the US were mostly not available in Germany and most of Europe when the system launched last year. So in the end it did come down to $100 more for no apparent value in return. Hence, PS4.
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Jeff Kleist Writer, Marketing, Licensing 6 years ago

They could cut the price to $50. The long term gains would be minimal

Buying Capcom has a great deal of things you don't realize, and it all comes back to saving face. To be acquired by a foreign company like that would hurt Capcom more than help them, this especially applies to the brass who are conscious of their legacy, a mindset that drives a lot of bad decisions in Japan. This is the same reason why Nintendo has not merged with someone who actually knows how to make hardware. While Disney and Apple are "in the club" as culturally acceptable suitors, Capcom would not carry their interest. They want to merge with Konami, or have Sony buy them. MS would have to pay out a gigantic additional sum, without the likely returns of Mojang, as most of Capcoms IP is in decline, and lacks the nostalgia factor with those under 20.


Not disputing you point, but a lot of the issue is that Europe is like the US, if you had to deal with media rights on a state by state basis. This takes forever, and the early adopters in those zones were going Sony anyway. Why release an incomplete product when it will cost you a pile, divert needed up units from more profitable zones, and probably be a net negative?
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Paul Jace Merchandiser 6 years ago
@Ben--I don't think the issue has ever been that the Japanese don'/won't buy foreign products and even the author of this article seems very confused by this. The issue has always been that the Japanese don't support US made video game consoles in comparision to the local Sony and Nintendo flavor. Or atleast thats what this guy said:

But in making that statement(Japanese won't buy US consoles) theres no direct correlation that means "the Japanese won't buy ANY foreign/US products" . Thats just silly.

Luckily Microsoft isn't oblivious to all of this. They launched in Japan nearly a year later because they knew the console wasn't going to sell well there so obviously there was no rush to release it there. As to why they even still support Japan, that ones a little more obvious: they need the continued support of all the many Japanese developers such as Capcom, Namco-Bandai, etc.
Xbox has a problem in everywhere outside the Anglo-American markets
I would argue that they have a problem even in those markets. They've done a pretty good job making changes in the last year but unfortunately they have already burned many peoples trust. Beyond that theres a few other things they can do. They really need to beef up the hard drive space if they expect us to install every game before playing it. This is something that should have been discussed before the console launched, not after. The new COD system will come with 1 TB but honestly all XBO systems should have launched with atleast that much hard drive space. And speaking of space, why does my 500 gb hard drive have less than 400 gb of usable space? I'm not an expert but it shouldn't take up 100+ gb for system operations. And if it really does they shouldn't have advertised it as a 500 gb hard drive. They are just asking for a class action lawsuit on that.

The other thing they did that was long over due was remove the paywall for most of the apps and some of the sales. I can understand people needing a Gold membership for Games with Gold but they should also remove it for the free to play games, although I think there was some talk that this might already be in the works.

Overall Microsoft still has time to turn things around, atleast in their key markets of the US and the UK. I do agree that they should do more to expand their reach and try catering to several other markets. But regardless of how much they expand they won't be able to please every single market they sell in. Nobody is capable of that.
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Justin Keeling Founder & CEO, Lumikai Ltd.6 years ago
Ben - did you lead Rob's article or just the headline?

Japan loves foreign products on the whole, but they have to be culturally relevant too. The world's most popular Starbucks is around the corner from me in Tokyo. Queues for the next Apple product are as long, if not longer here than any launch city around the world. Designer goods from Channel and Prada fly off the shelves. It's about branding, value and design, less where it came from.

As an aside; I was at the Xbox party this year after TGS with Sensui-san and Phil Spencer, and it was a pretty well attended, upbeat affair. I don't think they're under any illusions on sales performance, but if nothing else I hope they continue to support Japanese developers releasing abroad.
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Jacob Riis Communication Director, Nordic Game Program6 years ago
Ben, are you serious? You know you are shouting to the US consumers from an UK industry site to go to war against Japan based on the direct opposite of what you read in the article you're commenting on. Right?
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Lynn Fredricks President, Mirye Software6 years ago
@Ben Microsoft's got multiple issues with the Xbox. While being from a foreign company CAN be a factor in selling something in Japan, it comes down to something else...

- Previous efforts have flopped with earlier generations of the Xbox. Some people won't give it a chance after that
- They haven't really made an effort to provide an interesting value proposition as compared to the other game systems; Japanese customers like uniqueness
- While there are uber otakus who will buy every game system, they are a minority - chances are they account for many or most of the Xbox One sales so far
- You have a generation of parents (and even grandparents!) who grew up with Nintendo and will only buy that

Japanese sense of "fairness" is different, and the closer to you get to institutionalized industries, the more you see that. This isn't the case at all. And more often than not, it isn't a "race card" situation.

As for comparisons to Apple, that's a comparison to an exceptional case (much like it is everywhere). Apple messaging has almost always been in tune with Japanese consumers, even if they've made some serious errors in Japan in the past.
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Linda Eriksson Localisation QA Project Coordinator, Testronic6 years ago
Ben don't you think consumers should buy the products which they feel appeal to them the most rather than spend money on a console just to be patriotic? I don't think anyone wants to buy a games console as a favour, the fact that Americans are buying more PS4s than Xbox Ones is a failure on Microsoft's side, nothing else.
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Tom Keresztes Programmer 6 years ago
I don't think anyone wants to buy a games console as a favour, the fact that Americans are buying more PS4s than Xbox Ones is a failure on Microsoft's side, nothing else.
The PS4 sales figures in Japan are not stellar either.
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Jordan Lund Columnist 6 years ago
I put this in the China vs. Japan article, but it seems relevant here as well... It doesn't matter how well or how poorly a console does in Japan. Japan hasn't been relevant for the gaming market in years. Their share has only gotten smaller and smaller.

Take a look at the current numbers:

Globally, games were a 70.4 billion dollar industry in 2013:

Japan? 10.8 billion and 1/2 of that was smart phones.

So out of gaming as whole, Japan makes up 15.3% of the gaming marketplace. 1/2 of that is mobile devices. So the console market there is TINY compared to the rest of the world. They've gone from 25% of the global console gaming market in the heyday of the NES and SNES down to less than 10% today.
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Marty Howe Director, Figurehead Studios6 years ago
How about approaching,say, the top 5 Japanese game developers, contract them to make some Xbox One exclusive games that cater to the Japanese market\culture. Do this 5 years ago (keep it secret) Then release the console to their region with a few games 'ready to go'

Then watch the big sales roll in.

Edited 4 times. Last edit by Marty Howe on 7th October 2014 7:44am

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Jeff Kleist Writer, Marketing, Licensing 6 years ago
Marty, they did that. Hasn't worked

More importantly, Japanese people will buy the console, p,as the game, and sell it. There were N64's stacked ceiling high a month after Ocarina of Time came out in used shops.
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Adam Campbell Product Manager, Azoomee6 years ago
Thanks for the post Jeff, I always appreciate your analysis.
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Jim Burns Research Asisstant 6 years ago
I 100% agree with this article. X1 has a lot of problems that the Wii U has always been slammed for. X1 gets a pass for some reason

Edited 1 times. Last edit by Jim Burns on 7th October 2014 7:58pm

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Marty Howe Director, Figurehead Studios6 years ago
Marty, they did that. Hasn't worked

hmm, what do you do then, just save your time and effort and focus on the market's where you know you'll be profitable I suppose.

Edited 2 times. Last edit by Marty Howe on 8th October 2014 1:26am

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With regards to form factor and japanese culture, I just think one has to think of a typical japanese household.
A console, has to tuck in nicely & neatly where space is a premium, and cannot be the centrepiece of the household. it should be both relevant but unintrusive. Especially in a mixed household, with grandma/grandpa living within...a way of sticking a console vertically/horizontally out of the way can help ...but even then, when you look at PS4 - it doesnt necessarily means its plain sailing.

On top of that, its being able to establish a range of relevant internationally culturally diverse games that can appeal to non native english speakers vs localised typed games with broad local japanese appeal. Those are the tip of the various inverse iceberg challenges tackling the Japanese market - which is totally a different beast to the Rest Of The World. literally
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Jeff Kleist Writer, Marketing, Licensing 6 years ago
@@Dr. Wong

Glad to see someone else mentioning Japan's divergence.

That's one of the reasons that I've been advocating that Microsoft had marketed it as a DVE that plays games. The X11 form factor is similar enough to those DVRs. That it should be fine
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Richard Vaught Studying B.A. in Game Design, University of Advancing Technology5 years ago
Why not take a few swings at Xbox One. They've been taking them at Nintendo's WiiU for a year now.
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