[j^aws]

Microsoft Aims to Reverse Xbox's Japan Failure With Local Games

June 29 (Bloomberg) -- Two years after Microsoft Corp. Chairman Bill Gates handed out the first Xbox game console at a Tokyo video store, the machine's Japanese sales trail those of Sony Corp.'s rival PlayStation 2 console by 48 to one.

That's partly because Japanese Xbox owners have about 160 games to choose from, compared with more than 6,000 for the PlayStation 2. Microsoft, the world's biggest software maker, plans to gain on Sony by releasing new games tailored for Japanese users with the next version of the Xbox, said Norman Cheuk, head of Microsoft's game development division in Tokyo.

``It's too late to be No. 1 on this version of the console,'' said Cheuk, 35, who moved to Tokyo from Microsoft's Redmond, Washington, headquarters in September and oversees a team of 100 game developers. ``A lot of what we're doing today is to position ourselves. We're looking at the future generations where we'd like to be successful.'' Microsoft hasn't said when it will release an updated Xbox console.

Japanese consumers bought about 60,000 Xboxes last fiscal year, compared with 2.9 million Sony PlayStation 2 consoles, according to Tokyo-based market researcher Enterbrain Inc. The Xbox ranked third by sales behind PlayStation 2 and Nintendo Co.'s GameCube, according to Tokyo-based market researcher Enterbrain Inc. The companies don't report console sales by country.

Xbox sales in Japan -- the world's second-biggest market for video-game consoles and software after the U.S. -- slid by two-thirds in the year ended March 31, according to Enterbrain. Sales dropped even after Microsoft cut the console's price by a third to 16,800 yen ($153) in November.

`Strong Support Base'

To grab market share from Sony and Nintendo in Japan's $3.8 billion market for game consoles and software, Microsoft must convince Japan's biggest game publishers to make more titles for the Xbox, said P.J. McNealy, an analyst at American Technology Research in San Francisco. Microsoft's own Japan-based game developers plan to release just three new games over the next year, according to the company.

``To be successful in the Japanese market you need a strong support base of Japanese developers,'' McNealy said. ``For Sony and Nintendo, their base in Japan gives them a huge edge over Microsoft.''

Konami Corp., Japan's biggest independent game maker, released flight-simulator game ``Air Force Delta 2'' exclusively for the Xbox when the console debuted. The follow-up version of the game will be exclusive to the PlayStation 2, said Hitomi Nozawa, a spokeswoman for the game maker.

Capcom, Square Enix

Capcom Co., Japan's third-biggest game maker, has turned down offers from Microsoft in recent months to help pay distribution and development costs in return for more exclusive games for the Xbox, said Kazuhiko Abe, head of Capcom's corporate strategy division, without giving details. He said his company, which currently makes one game exclusively for the Xbox, isn't interested in developing more.

``There are no plans,'' Abe said in an interview. ``It's just not profitable enough.'' Of the 25 games Capcom plans to release this year, only one will be compatible with the Xbox.

Asako Miyata, a Tokyo-based spokeswoman for Microsoft, declined to comment on the company's discussions with Japanese game makers.

``We can't provide details as to our specific efforts with those publishers, including financial support,'' Miyata said.

Square Enix Co., Japan's No. 2 game maker, publishes none that can be played on the current Xbox. It's considering making titles for the next Xbox, said Michiro Sasaki, general manager for corporate planning. Tokyo-based Square Enix's ``Final Fantasy'' series for the PlayStation 2 console -- in which players assume roles and team up with other characters to achieve objectives -- has sold 60 million copies worldwide.

`Dead or Alive'

Microsoft has allied with smaller Japanese partners. Tecmo Ltd., a Tokyo-based game developer whose 52.6 billion yen in sales last fiscal year were a quarter of Capcom's, makes the two bestselling titles for the Xbox in Japan, according to Enterbrain. They include ``Dead or Alive,'' a fighting game centered on a martial-arts tournament.

The Xbox trails in Japan because players have a smaller choice of locally designed games, said Peter Moore, Microsoft's vice president of retail sales and entertainment -- especially popular role-playing titles like ``Final Fantasy.''

``You could probably argue that if we had a Japanese-centric role-playing game at the beginning of the console life cycle we would probably be in a better position today,'' Moore, 49, said in an interview last month at the E3 Electronic Entertainment Expo in Los Angeles.

Better Outside Japan

There are fewer than 160 Xbox-compatible games sold in Japan, compared with 6,165 that can be played on the PlayStation 2 and 191 for the GameCube, according to the companies.

The Xbox has performed better outside Japan. Microsoft said last month it was on track to sell between 13.5 million and 16 million of the consoles worldwide by the end of its business year on June 30. That's roughly on par with the 14.5 million GameCube consoles Nintendo had sold as of March 31. Sony had sold 70 million PlayStation 2 machines as of March 31.

Cheuk said he's replaced some of his team's 100 game designers and engineers with new Japanese talent, without giving details.

In the U.S., Cheuk oversaw the development of ``Project Gotham Racing,'' the No. 3 best-selling Xbox game worldwide, which lets players virtually race cars such as Ferrari SpA's Enzo through the streets of major cities.

Monk Warrior

Cheuk's Tokyo studio released ``Magatama'' -- an action game featuring a sword-wielding monk warrior who fights to rid an ancient Japanese capital of supernatural forces -- in November. Spokeswoman Miyata wouldn't disclose the game's sales. The studio will release ``Sudeki,'' a role-playing game, by the end of 2004 and two more titles by mid-2005, the company said this month.

Microsoft's Japan-based game developers have faced setbacks. The company said in a statement earlier this month that it canceled its ``True Fantasy Live Online'' role-playing game -- which would have accommodated thousands of players at once over the Internet -- after almost three years in development because it wasn't happy with progress on the game.

Source

Will M$ ever break the Japanese market

[Spidermate]

Never. Microsoft would be better off not competing with neither Sony or Nintendo over there on their own turf.Those Japanease are never going to accept them.

[archie4oz]

Those japanese eh? And never accept eh? I guess MS isn't as saavy as IBM (or perhaps Xbox division isn't as saavy as the Windows/Office division) :P

[Fafalada]

Those Japanease are never going to accept them.

If Nintendo and Sony showed the same incompetence in US market as MS has thus far shown in Japan(and other Asia areas for that matter), I doubt you'd see US people "accepting" them either.

[cthellis42]

Wait, wait... Making games specifically toward a region might help you sell more games AND more consoles in that region? THE HELL YOU SAY!! :P I wonder how long it took a sales wonk to come up with that one...

One part seems a bit screwy, though: There are fewer than 160 Xbox-compatible games sold in Japan, compared with 6,165 that can be played on the PlayStation 2 and 191 for the GameCube, according to the companies.

Are there SERIOUSLY only 191 games for the Cube out there?

[passerby]

XBox is currently near the end of its official cycle, and still not doing well there. This is when the dev <-> buyer cycle bites really hard. Devs do not publish for it because of small number of buyers. Buyers do not buy because of small number of devs.

I think the XBoxNext, with some careful marketing, may have a better chance. However the dreaded dev <-> buyer cycle may well bite into next-gen as well. Devs, remembering last gen, do not publish expecting small number of buyers. Buyers, remembering last gen, do not buy expecting small number of devs.

It's quite amazing how the failure or success of one generation can affect the next. MS definitely has an uphill battle to fight in Japan.

[Jov]

Originally Posted by passerby

XBox is currently near the end of its official cycle, and still not doing well there. This is when the dev <-> buyer cycle bites really hard. Devs do not publish for it because of small number of buyers. Buyers do not buy because of small number of devs.

I think the XBoxNext, with some careful marketing, may have a better chance. However the dreaded dev <-> buyer cycle may well bite into next-gen as well. Devs, remembering last gen, do not publish expecting small number of buyers. Buyers, remembering last gen, do not buy expecting small number of devs.

It's quite amazing how the failure or success of one generation can affect the next. MS definitely has an uphill battle to fight in Japan.

Upon the above, MS will find it near impossible in dominating the overall market without a good stronghold in Japan (gaining Japanese devs support), unless the Japanese market (gamers and devs) --> 0 influence on the industry.

[jvd]

I think this is a great step foward .

There are many games that will cross the gaps normaly.

There are american games that the japs love to play and there are japanesse games americans love to play .

But we all love to play games geared towards us .

This can only help ms and really if ms only doubles thier japan numbers that is a great step foward.

Though i think they will at least increase four fold over what the xbox1 has in japan.

[thop]

There are 6000 games available foe the PS2? I bet my ass 5000 of those never sold more than 1000 copies.

Also what games from the US are popular in JAP? I can't think of any right now.

[Spidermate]

Originally Posted by archie4oz

Those japanese eh? And never accept eh? I guess MS isn't as saavy as IBM (or perhaps Xbox division isn't as saavy as the Windows/Office division) :P

I don't get it. :? :? :?

[archie4oz]

You do realize that IBM does rather well in Japan as does Microsoft (at least as far as Windows/Office penetration)...

[AlStrong]

Originally Posted by thop

There are 6000 games available foe the PS2? I bet my ass 5000 of those never sold more than 1000 copies.

Also what games from the US are popular in JAP? I can't think of any right now.

halo?

[thop]

I think Halo sold only around ~100.000 in JAP.

[AlStrong]

and aren't there only 200,000 xbox consoles sold in Japan?


edit: I have no idea how many are sold, but I think it's under 500K

[Evil_Cloud]

Originally Posted by thop

I think Halo sold only around ~100.000 in JAP.

Less.

And indeed, Microsoft hasn't sold much more than the original launch shipments... In comparison with other consoles, Xbox is really a disaster in Japan. The only reason it sold was perhaps it's cheap price and Tecmo support. :/

[cthellis42]

According to MagicBox, there's been ~21K Xboxen sold this year, 97K in 2003, and 327K in 2002. So that puts it at around 450K total. (Versus about 2.4 million GameCubes, which is their biggest comparative gulf.)

Halo sold 70K copies in 2002 (to DOA3's 140K and PGR's 50K) and, erm... no specific title numbers given for 2003, though they do state that Microsoft as a publisher sold 144,200 titles total, so none of those numbers are really going up much.

[AlStrong]

any sales figures on other tecmo titles?

doesn't seem to be any hope of an Xbox recovery in Japan...

definitely need more devs...but with all the PS2 people....and knowing that PS3 has backwards compatibility.... :?

[Evil_Cloud]

Originally Posted by cthellis42

According to MagicBox, there's been ~21K Xboxen sold this year, 97K in 2003, and 327K in 2002. So that puts it at around 450K total. (Versus about 2.4 million GameCubes, which is their biggest comparative gulf.)

Halo sold 70K copies in 2002 (to DOA3's 140K and PGR's 50K) and, erm... no specific title numbers given for 2003, though they do state that Microsoft as a publisher sold 144,200 titles total, so none of those numbers are really going up much.

I guess that numbers are for the entire Asian market.

But Dead or Alive 3, nor Ninja Gaiden, really improved Microsoft's situation in the east.

[cthellis42]

Not on the top ten in 2002 (which puts them sub-19,000) and in 2003 it's up in the air (though to my knowledge PDO scored over 50k, and probably a bunch of others went to the DOA3 special editions). Ninja Gaiden's sales are in 2004's, and it briefly peeked on the top sales charts by moving ~43K the first week--33K on the first day. (And a hardware spike during that time as well.) It's probably somewhere between 50-60K now (but hard to track).

[Pepto-Bismol]

Japanese consumers aren't as pivotal as you guys are making them out to be.

The overwhelming majority of sales (and, hence, revenues) are coming from markets outside Japan.

Japanese digital content providers, on the other hand, are vastly more important. They are what Microsoft's Home and Entertainment unit should have been wrestling for.

[Brimstone]

What is the Microsoft developer strategy in Japan?


They hired some former Square higher up, but what else have they done? Capcom has lost a lot of people that have gone on to start new companies that are working on PS2 games. Even Sega lost a top person that migrated over to Naughty Dog.

So who is Microsoft hiring to work for its Japanese game studios? Fresh graduates that have never worked in the industry before?

[Deepak]

Originally Posted by thop

Also what games from the US are popular in JAP? I can't think of any right now.

I think GTA3/VC have been most sold US games in Japan, both did suprisingly well there around 500k each?? and still selling...

[RaolinDarksbane]

I think those 6000+ titles includes PS1 games. The PS3 and Nintendo's Revolution will have BC which will enticed buyers into buy them. If MS don't implement BC into XBOXNext, then they pretty much have to start over and have 20 games(I am being optimistic here) at launch.

[Evil_Cloud]

Originally Posted by Deepak

I think GTA3/VC have been most sold US games in Japan, both did suprisingly well there around 500k each?? and still selling...

Crash Bandicoot and Ratchet & Clank also sold well in Japan after they 'adjusted' the game a bit for the Japanese market. Like they removed Crash's eyebrows and such, to let him look more cartoonish.

[Spidermate]

Originally Posted by archie4oz

You do realize that IBM does rather well in Japan as does Microsoft (at least as far as Windows/Office penetration)...

Um...this is not the OS world.This is the gaming world,two completely different things.This is not an industry where you build something and lay back while others continue to work out all the problems.You have to constantly be thinking up better ways to push the gaming world.Nintendo and Sony are known for this.