Japan has long been something of a foil to the Western world. The media, the food, the bonkers advertisements—they’re all punchlines to the timeless joke, “Oh, Japan.” There’s also no shortage of weirdness in Japanese games, even after you get past the fog of mini-skirts. Because unlike most, Japanese gamers take mobile seriously.
This has made it difficult for the new console generation to find a foothold in the island nation. Sony is still trying to get PS4 propped up and Nintendo’s Wii U has hardly fared better there than in the West, and they’re both Japanese companies. Microsoft has the worst of it. Theirs is a perfect storm of disadvantages.
Two key factors distinguish the Japanese mobile market from others, and neither are good news for Xbox One. Firstly, Japanese gamers are willing to drop serious money on mobile games. As Serkan Toto, CEO of Japanese mobile consultant Kantan Games, told Venturebeat, paying mobile users in Japan spend an average of $65 a month on mobile purchases.
A massive Clash of Clans billboard in Japan (Source: GamesIndustry)
This reflects a fundamental difference in thinking: what Western gamers might consider a time-killer, Japanese gamers may consider a must-have. Mobile is not just a pocket industry in Japan, but a prevailing one. Top-dog IP like Final Fantasy, Dragon Quest, Monster Hunter and Kingdom Hearts made the jump to mobile at the behest of hungry Japanese consumers. And these aren’t all match-threes and card games; fully fledged RPGs dominate Japanese sales. What’s more, the biggest titles are new IP that found success partially because they weren’t associated with consoles. In no small part due to their prevalence, smartphones and tablets have more pull in Japan than any console can hope for.
Secondly, Japan’s mobile sector is as polarized as it is popular. Roughly 75 percent of the country’s mobile revenue goes to just two IP: Puzzles & Dragons and Monster Strike. This underscores a broader and established trend: Japan is loyal to Japanese companies and products. Between 2001 and 2013, Toto said, not a single foreign-made game made it into Japan’s top 100 mobile titles. Clash of Clans became an exception to this rule around 2014, but only after an exorbitant marketing campaign. Western hits don’t register on the Japanese radar regardless of how well they’ve performed elsewhere. 
Within the Japanese market, Xbox One will have to fly to get where mobile can walk. It’s no wonder the Japanese treat the system like some leper; it’s foreign and a console. One of those is bad enough, but being both is a one-two failure combo. We’ve already seen proof of that: Xbox One moved just 100 units in Japan during the week of June 8, 2015, a record low and less than one percent of PS4 sales for the period. It could only be in a worse spot if it exploded when within 50 yards of sushi.
Commendably, however, Microsoft Japan isn’t backing down, though they are skipping this year’s Tokyo Game Show. They’re no stranger to uphill battles after Xbox 360, and, as Windows Central reports, the company is hedging their bets on Windows 10 to be a shot in the arm.
“We’re not withdrawing [from Japan],” MS Japan boss Takuya Hirano said at a July event. “Because of Windows 10, even the Xbox One has new features that we’ll try to appeal [to Japanese consumers] with.”
Hirano hit it on the head: Microsoft has to uniquely market to Japanese consumers. In both size and style, they need to match the market if they want Xbox One to be relevant. They can’t play the same hand that they do in Europe or the U.S., starting with scale.
Console manufacturers cannot look at Japan’s gaming audience and consider every user a potential consumer, because many of them will never give consoles the time of day. Every producer wants everyone to love and buy their product, but they can’t expect them to. It’s not about giving up; it’s about being realistic. The company needs to determine and target the portion of the market that they can conceivably hook, matching their inventory and costs to demand. To put it differently, Microsoft has been marketing too many hearing aids to too many people who can hear.
But all the financial trickery in the world won’t mean anything if Xbox One doesn’t change its image. Japan does not care about Forza, Gears of War, Halo or all the sports cash-ins in the world. Instead, games like Scalebound need to be on the front lines. Scalebound is actually a perfect poster child, a Japanese-made RPG seemingly akin to Monster Hunter (and, according to Phil Spencer, “making good progress”). Better would be more partnerships like the one behind Psycho-Pass: Mandatory Happyness, an Xbox One exclusive based on a popular anime and manga IP.
Stopping just short of giving it cat ears and Final Fantasy hair, Microsoft needs to Japan-ify the Xbox One as much as possible. That means ditching Kinect, which only makes the leap to Xbox One that much more daunting for users accustomed to a cheap platform. It means refining the target market and making Japanese studios the face of Xbox One in the region. Perhaps above all, it means moving significantly more than 100 units a week.
