The state of Xbox in Japan

Xbox anime mascot for TGS 2020
Microsoft's Xbox anime mascot for its 2020 Tokyo Game Show presence. (Image credit: Microsoft)

Since its inception, Xbox has generally been on the backfoot in the lucrative Japanese gaming market, and that trend is likely to continue at least for the foreseeable future. But as of late, there are signs that the winds may be changing Microsoft's fortunes. 

Surprisingly, Xbox has started to recover much of its lost ground from the nightmarish Xbox One generation, owing to a combination of Xbox Game Pass' value and Xbox Series S affordability. There are several other factors in play, including the global chip shortage, which has allowed Microsoft to meet Sony's PlayStation 5 on stock levels in Japan, or in some cases even exceed them. 

Microsoft seems to have sensed this unique opportunity and has begun plowing investment into the region, going on a hiring spree while committing to lucrative deals for Xbox Game Pass with Japanese partners, such as Sega and Bandai Namco. For gamers both in Japan and in the West, it could lead to a renaissance of Japanese game dev support on the Xbox platform. 

Xbox's surge in Japan

Xbox sales figures from Famitsu, showing the trajectory of growth for the Xbox Series X|S consoles (yellow). | Compiled by Hiska-kun. (Image credit: Famitsu | Hiska-kun)

Last year, Microsoft described Japan as its fastest growing market for Xbox, and that trend certainly seems to have continued. While details on uptake of Microsoft's gaming subscription service Xbox Game Pass are hard to discern per region, at least anecdotally, it does seem to be a driving force behind Microsoft's recent upswing in the market. 

Famitsu (via Gematsu) tracks the gaming industry's retail sales in Japan, issuing weekly reports on the performance of the major players both in terms of games and hardware sold. The most recent reports show that Xbox has recently moved past 260,000 units sold of its Xbox Series X and Xbox Series S consoles, more than doubling the lifetime sales of the Xbox One consoles in the region already. 

While it's undeniable growth for the platform, it's still absolutely dwarfed by PlayStation and Nintendo both. The Nintendo Switch consoles and PlayStation 5 have sold millions of units between them, and generally beat Xbox in the week-over-week sales charts too, although supply constraints has occasionally given Xbox a sales lead over PlayStation 5 in recent months. And therein lies some of the opportunity here. 

Xbox Series S Console

(Image credit: Matt Brown | Windows Central)

The Xbox One generation may have been uniquely devastating for Microsoft's chances in Japan, with absolute rock-bottom support for Japanese games both from first and third parties. The Xbox 360 generation boasted titles like Lost Odyssey and Blue Dragon, while more recently, Xbox has struggled to grab support from even the biggest publishers like Square Enix on games like Final Fantasy 7 Remake and Final Fantasy 16. Microsoft has been fighting back though. 

Games like Yakuza: Like a Dragon, Danganronpa, Octopath Traveler, Dragon Quest XI, Scarlet Nexus, and legendary Xbox holdout Persona are either already on Xbox or are coming soon. Microsoft has also partnered with smaller developers to get games like Gunvolt 3 and Eiyuden Chronicle: Hundred Heroes on the platform, with even more Japanese titles hitting the upcoming Xbox games list. 

Microsoft knows it has more work to do, though. Sometimes simply throwing money at a problem isn't enough, which is why Microsoft is investing more than ever in its local Japanese operations too, to help cultivate and build those important business relationships, and gain deeper insight into the Japanese games industry and its culture. 

A strategy for growth

Microsoft has invested a lot in its social presence in recent years, with the main Xbox account replying to anyone and everyone while cracking jokes and sharing memes, primarily in English. The core Xbox markets of the U.S., U.K., Germany, and so on all have localized social media, with varying degrees of marketing spend per region. Xbox's marketing presence in Japan has largely been peripheral at best over the course of the last decade, but we're starting to see signs of change. 

The Xbox Japan YouTube channel has become increasingly active, sharing trailers localized for Japanese specifically, although it remains tiny as of writing. Microsoft has also been ramping up on ads tailored specifically for Japan, such as the above Xbox Cloud Gaming showcase, and a more recent trailer showcasing Xbox Game Pass.

Microsoft has also begun working with Japanese influencers to promote some of their products — namely Game Pass once again — with sponsored segments appearing in an array of VTuber streams over the past year such as the below example from Botan. 

Microsoft has also been rapidly expanding its staff based directly in Japan. Naturally, as part of acquiring ZeniMax, Microsoft inadvertently acquired Tango Gameworks, known for The Evil Within, directed by the legendary Shinji Mikami of Resident Evil fame. Even beyond Tango, Microsoft has been hiring producers, content directors, and managers of all stripes specifically for the gaming division in Japan and the wider Asian market too. The role for director of Japan creator partnerships has been open for a couple of weeks, and describes Microsoft's specific targets for growth, while also noting that the successful applicant will also be tasked to put a new team together, specifically to help grow Xbox's footprint in the region. 

"In this role, you will develop strong professional relationships with key executive partners across the Japan gaming ecosystem. You will identify opportunities and create strategic growth plans for partnerships with some of the world’s largest Game Creators."

"As the Director of Japan Game Creator Partnerships, you will need to recruit, develop, and retain a team of high-performing Strategic Partner Managers to achieve these business goals."

Quite clearly, there's a plan in place here, and the investment is beyond anything we've seen Microsoft commit to the region since Xbox's inception. It may take years to fully come to fruition, though. And sure, the current situation for support on Xbox from Japanese game developers, down to simple localization, still leaves a lot to be desired.

The to do list

Xbox Series X|S Controller Comparisons

(Image credit: Miles Dompier/Windows Central)

Over the past few weeks, I've been contacting Japanese Xbox gamers to learn more about present sentiments about the platform in the region. As a Westerner who has never been to Japan, it's hard to really give what I would consider to be a broad and detailed depiction of the vast array of diverse voices and their concerns over being an Xbox customer in the region. However, there were some prevailing trends that I tend to see time and time again, many of which are all too familiar from conversations with gamers outside of the Anglo-centric U.S.-U.K. duopoly for Microsoft general support. 

Japanese Microsoft blogger WPTeq noted to me that despite the upswell in sales, Xbox still remains a niche interest for most Japanese gamers and game developers alike, reminding us that many game developers often forget to mention the Xbox versions of their games at all, even if they're actually on the way. 

"The general public and even gamers hardly pay attention to [Xbox]. Of course, it's better than the bad days of Xbox One."

WPTeq reiterated some other sentiments I've heard regarding the appeal of Xbox's typical game releases in Japan, which often skew towards sci-fi rather than contemporary urban fantasy, which is often more popular in the region as seen in games like Persona and lots of current anime trends.

Other Xbox fans reached out to highlight how poorly Xbox handles localization in Japanese too — which continues to be a trend the world over outside of English. Yamada highlighted how much praise Sony received for its localization and respect of Japanese culture with its Western-developed samurai epic Ghost of Tsushima, while Xbox seems to struggle to get even some of the basics right in flagship titles like Halo Infinite. Games like Psychonauts 2 didn't receive any Japanese localization, while more recent Gears titles only sported Japanese subtitles, without any voice-over work. Other games like Forza Horizon also sported translation errors, often with hilarious results, but there's a potential for mistranslations to also cause offense and be insensitive if handled incorrectly. 

It's not all doom and gloom, though. Xbox podcaster and Japanese Xbox fansite hako1ba_xbox reached out to note that they'd definitely seen a stronger media presence for Xbox than in previous years, with a noticeable amount of interest in Xbox Game Pass and the Xbox Series S. Hako1ba echoed other comments I've seen expressing a desire for Microsoft to revive the old news show Inside Xbox Japan, which represented some of Microsoft's more extensive efforts to market the platform back during the Xbox 360 era. 

In the dozens of conversations I had over the past few months, it all too often simply came back to games. Similar to the situation in the Western battleground for console supremacy, it's ultimately the lack of truly compelling mature AAA single-player games that seem to be the driving force behind negative sentiments around Xbox as it competes with Sony and Nintendo for mindshare. Microsoft has very notably been turning the situation around, and it's not for lack of critically acclaimed titles — Xbox actually took the top rating from Metacritic last year — the problem has always fallen on those attention-grabbing cinematic titles that Sony seems to have no issue publishing time and time again. 

Forza and Flight Simulator both were often cited to me as some of the best Xbox games that were driving satisfaction for Xbox gamers in Japan, but lamentations about PlayStation-exclusive games like God of War, Ghost of Tsushima, The Last of Us, and Horizon were fast and frequent as well.

A rare opportunity

Xbox Series X and Series S with controllers

(Image credit: Future)

Combined with the limited stock of the PlayStation 5 and the high-value proposition revolving around the Xbox Series S, Xbox Cloud Gaming, and Xbox Game Pass, Microsoft has a rarely strong position to capitalize on a lost decade of momentum for the Xbox platform in Japan. It's by no means going to be an overnight fix, but there's a definitive and very lucrative opportunity for Xbox and Microsoft in general in Japan and the broader Asian market. 

Gaming drives a positive effect over the entire Microsoft brand, I feel, which is all too easy to associate with the drudgery of work buried in mountains of Excel spreadsheets. New Xbox fans may find themselves intrigued by Surface products potentially as well, or find interest in an Xbox Cloud Gaming subscription leveraging their phones or already-owned laptops. Gaming brings people together in a unique and powerful way, and it's undeniable how popular Japanese culture, whether it's manga, anime, or video games, has become in the West in recent years. If you're a fan of Japanese games and content right now, you're effectively forced to at least consider PlayStation over Xbox these days, as popular anime-styled titles like FFXIV, Genshin Impact, and others skip over the platform. 

The promise is all there, though. I'm often reminded of an interview where Microsoft gaming CEO Phil Spencer was addressing the issue of getting Japanese games on Xbox, when a fan yelled "Persona!" to which Spencer replied, "We hear you." A couple of years later, not only is Xbox getting critically acclaimed Persona 5 Royal but also Persona 4 and Persona 3, arguably over-delivering on that hinted promise. Microsoft is also known to be working with Hideo Kojima of Metal Gear fame, as well as Sega on some mysterious "Super Game" project. Xbox is also confirmed to be in attendance at the Tokyo Game Show in September 2022 as well. 

I reached out to Microsoft to comment on how things are going in Japan, describing the country as the "cultural heart" of the video games industry. If there's a more powerful statement to describe how Microsoft reveres the Japanese games industry, I'm not sure what it is. 

"Xbox recognizes Japan as the cultural heart of the video games industry and a creative powerhouse that has created iconic characters and franchises played by millions of people around the world. Japan has become one of Xbox’s fastest-growing markets worldwide and we’re excited to see our community of players in Japan grow through choice in how they play, be it on consoles, PCs, or mobile devices with cloud gaming. In Japan, we are focused on growing our team within the country, creating more partnerships with local creators, and bringing Japanese language localization to more of our games." 

We're starting to see a real change of fortunes for Xbox in Japan, both for Japanese gamers and fans of Japanese games in the west. There's still a lot of work to be done, but it's undeniable that Microsoft is putting its pieces in place to really, really give it their all over the current generation, and beyond.

Jez Corden
Co-Managing Editor

Jez Corden is a Managing Editor at Windows Central, focusing primarily on all things Xbox and gaming. Jez is known for breaking exclusive news and analysis as relates to the Microsoft ecosystem while being powered by tea. Follow on Twitter @JezCorden and listen to his XB2 Podcast, all about, you guessed it, Xbox!