The presentation was part of Xbox’s broader strategy to win over an Asian audience and gain market share from Japan, a country that has traditionally eschewed its consoles. According to Weekly Famitsu magazine, Xbox has sold a total of 2.3 million consoles in Japan in 20 years.
“We’ve been on this journey for a long time and we’re not giving up,” said Sarah Bond, Xbox’s corporate vice president of game creator experience and ecosystem, in an interview with The Washington Post after returning from Tokyo.
Bond said Xbox is betting the company’s investment in a range of Asian titles will pay off, showing that Xbox is more than just Halo and Forza. Typically, Asian players have preferred purchasing PlayStation and Nintendo devices, where they can find more Japanese role-playing and story-based games.
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“We’ve invested in both the depth and breadth of the titles featured on our platform, which is exactly how reputations are built,” Bond said. “We see that game makers are more willing to take risks because of Game Pass because they actually know they will find more audiences. Someone will fall in love with something that isn’t necessarily that big of a brand name, but is a really, really wonderful player experience.”
Bond said that so far there are more than 250 developers in Japan building more than 150 games, including titles like “Tetris Effect: Connected” and “Craftopia”. Those titles will live on the Xbox platform, even if many are not exclusive titles. At the Tokyo Game Show, Xbox announced that pre-existing PlayStation titles such as “Danganronpa V3: Killing Harmony Anniversary Edition” and “Ni no Kuni: Wrath of the White Witch” are now available on Game Pass. It has plans to bring “Eiyuden Chronicle: Hundred Heroes” and several Persona titles to Game Pass in the coming year.
“While it is predicted that Xbox series devices will not sell anywhere near the level of Sony’s PS5 in the coming years, Microsoft is now more competitive than it has been in the past decade. [in Japan],” said Piers Harding-Rolls, an analyst at the market research firm Ampere Analysis. “That shows that Microsoft’s approach to the market is paying off.”
Microsoft noted that the current generation of consoles sells better than previous generations, although it did not share specific sales figures.
Bond said the company had thought about its past gaffes, such as launching the Xbox One console in Japan almost a year later than in other markets.
“When we talked about the Xbox One launch, there were a lot of things about that launch that we know we didn’t do well,” Bond said. “It took a long time for us to learn from our mistakes and really apply them and start building out our hardware, our product line and our relationships with the creators.”
For the launch of the Xbox Series X and Series S consoles in 2020, the company has released the new consoles in Japan simultaneously with other parts of the world. According to Microsoft, the Xbox Series X generation is the best-selling to date. Harding-Rolls’ market research firm found that Xbox sold fewer than 100,000 consoles in Japan last year, compared to Sony and Nintendo’s combined sales of more than 6.7 million.
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Harding-Rolls said Microsoft’s small improvements on a small market share lagged badly behind Japanese consoles and mobile devices.
“There’s only so much Microsoft can achieve with its console product strategy in Japan, and [that] underscores why it aims to reach gamers across all devices with its cloud gaming strategy,” he said.
Bond said Microsoft’s investment in increasing its audience in Japan and beyond would take time.
“A hardware generation takes a long time to build all that engineering,” she said. “It’s a five to seven year process to bring that up. Building relationships takes a long time. And building a real AAA game can — we’ve seen it takes up to six years to build a AAA game.”
In June, Microsoft Gaming CEO Phil Spencer acknowledged that Japanese developers don’t always come to Xbox, and the company has been working on adding more games from the country, such as the upcoming Persona titles and an unannounced game that the creator of the Metal Gear series will release. Hideo Kojima oversees. Persona game developer Atlus did not respond to a request for comment.
Bond kept tight-lipped about her meeting with Spencer and Kojima last week, simply saying, “We’re working with creators in Japan to create really special things for people who play on Xbox, and we’ll continue to do that.”
Xbox’s current business model involves selling the hardware at a loss, and last year in the Epic Games v. Apple trial, Lori Wright, Microsoft’s corporate vice president of gaming, testified that the company had never made a profit from it. selling consoles and instead focusing on software and subscription sales. Bond confirmed that the model will remain the same even as more game titles are added to Game Pass.
“The way our business works is we build a console and then we subsidize the console so it’s affordable for the consumer,” Bond said. “Then consumers make purchases on the console, they buy games, they buy subscriptions, and as a result, we make revenue and margin on that.”
The tech giant has its eye on most of Asia, not just Japan. In April, Xbox announced that it was launching the PC version of its subscription service in Malaysia, Indonesia, the Philippines, Thailand and Vietnam. Microsoft’s acquisitions of other studios have contributed to its Asian ambitions. Bond noted that the eventual arrival of “Deathloop” on Xbox made sense given that the game is made by Bethesda, which was bought by Xbox last year for $7.5 billion. In the same deal, the company also acquired Bethesda’s Tango Gameworks, the Tokyo-based studio behind “Ghostwire: Tokyo”.
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Despite the audience difference between PlayStation and Xbox, there is still a fair amount of overlap in titles offered on the two platforms. Earlier this month, PlayStation CEO Jim Ryan said Microsoft’s promise to keep Call of Duty on the platform for at least three years after the current agreement between series publisher Activision and Sony was “inadequate on many levels,” such as was first reported by GamesIndustry.biz. (Microsoft announced plans in January to acquire Activision for $68.7 billion in a landmark deal currently under review by regulators.) Sony did not immediately respond to a request for comment.
Microsoft’s Corporate Vice President of Communications Frank Shaw responded to Ryan’s statement by saying that “it makes no business sense for Microsoft to remove Call of Duty from PlayStation given its market-leading console position.”
Bond said Xbox’s way of thinking about expanding into other markets was by considering that there are over 3 billion gamers, but only a few hundred million consoles. The approach is to stop focusing on consoles.
“What we’re really focused on is making it possible for any of the 3 billion gamers to play any game on any device,” Bond said, when asked if the age-old console wars between Xbox and PlayStation would continue. “It could be a console, it could be a PC, it could be a phone, it could be a tablet, it could be a different type of handheld.”