A quiet battle is brewing in Japan – the battle for market share in the console gaming industry. The first time around, back in 2000-2001, the Sony Playstation 2 easily triumphed over the Microsoft Xbox. The second part of the war has just begun with the launch of the next generation of gaming consoles: the Playstation 3 and the Xbox 360.
And although no blood will be shed or wounds incurred, much at stake for both sides.

The first time around Sony had nearly a year and a half head start in Japan, giving the Playstation 2 a firm foothold in the gaming community. The console offered a very solid performance and featured exclusive games not playable on any other gaming platform. In addition, Sony placed a strong emphasis on marketing directly to the Japanese public, appealing to the unique needs of Japanese gamers. As a result, Sony’s PS2 snatched up a whopping 63% of the video game console market share. Nintendo captured the next largest market share (30%), leaving Microsoft with a meager 0.2% of gaming consoles sales according to Japanese gaming website Kotaku.com. In addition to Microsoft’s late launch date, the large size of the Xbox console put many off since the Japanese are very space conscious and value small, compact items. The Xbox offered far fewer games (582 games as of Winter 2004) than did the PS2 (966 as of Winter 2004). Perhaps the biggest mistake made by Microsoft, though, was the company’s lack of preparedness for marketing to the Japanese gaming community. The consequences of all of these factors were that Microsoft completely missed the mark and failed to get Japanese gamers excited about the new Xbox console.

Microsoft has vowed to change the tide of gaming in Japan with the launch of the Xbox 360. “Things are going to be different this time around” noted Peter Moore, the head of Xbox sales and marketing. Microsoft is dedicated to spend more time trying to appeal to the Japanese market, the second largest video game market in the world. The company has acknowledged that the original Xbox didn’t have any titles that were tailored to the local Japanese audience. Additionally, Microsoft recognizes that both the Xbox console and the game controllers were too large to appeal to gamers in Japan. This time around, Microsoft has partnered with the industry’s top publishers to get exclusive Xbox 360 games. The console has also been streamlined and slimmed down to gain more widespread aesthetic appeal. Moore is confident that Microsoft will grab a large chunk of market share from Sony, declaring “[Microsoft’s] been around the block now. We’re battle-hardened. It’s a whole different ball game this time.”

It seems though, that despite Microsoft’s best intentions, the company’s second attempt o capture the Japanese market has not gone as well as they had hoped. Once again Microsoft stuck to a more general marketing strategy to promote the Xbox 360 in Japan, offering few (if any) games specifically designed for the Japanese audience. And, thus, history seems to be repeating itself with the release of the latest next generation consoles. Despite initial reports of stores being sold out of Xbox 360’s in Japan on the console’s launch date, even Microsoft has to admit that the launch of the system has been highly disappointing. In sharp contrast to the Xbox 360 frenzy in North America, Japanese gamers have showed very little interest in the new console, though many gamers will readily admit that they are very excited about the upcoming release of the PS3.

Sony won’t make the same marketing mistakes with the Playstation 3. Why? Because Sony is a pro at tailoring their consoles to appeal to specific markets. The company has a much better grasp on the Japanese gaming public and what they like, and don’t like, in a game. And the Japanese love Sony for it – the Playstation 2 has taken the country by storm, easily surpassing the Xbox as the console of choice. Since the PS3 will first be released in Japan, the titles that will be released first will be those that appeal to Japanese gamers. More Western-oriented game titles will follow to draw in mainstream American and European audiences as the console is released in these markets.

All in all, it may just be too late for Microsoft to make a move in Japan. Perhaps the company would do better to set its sights on taking Nintendo’s #2 spot in the Japanese gaming industry. Although with Nintendo’s 30% market share (DS, GBA, and the GameCube), as compared to the Xbox’s measly 0.2% share, Microsoft still has a very long uphill road to climb to even reach that spot.

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