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The Modern Betamax? Why is Japan Saying No to the Xbox One?

As an avid gamer, I always get more than just a little bit excited when a new console comes to market. However, when it comes to actually buying a new system, I take a decidedly more conservative approach. As of today, I am still the owner of a Sony Playstation 3, what gaming nerds would define as a distinctly “last generation” console. That’s gamer talk for “your system is old, out of date. Get a new one!”

However, apart from the newly released Batman: Arkham Knight, I’ve yet to see any games that really interest me. Most of the PS4 games seem like simple retreadings or graphical enhancements of older PS3 titles. Indeed Sony is hardly alone when it comes to showing a patently obvious lack of ingenuity and innovation in making new games.

In short, I am something of a “Sony fanboy”, but I still don’t see enough from the PS4 to convince me to invest 40,000 of my hard earned yen in a new system.

“Well, then how about the Xbox One?” a friend of mine recently inquired. After all, there’s certainly no shortage of them available.

And this, dear readers, brings me to the crux of today’s story. Why is it that the PS4 continues to sell in the millions while the X-Box One is almost universally shunned by Japanese consumers, despite selling reasonably well in most other territories?

Its not just a question of a slight underperformance either. For the week ending June 14th 2015, the Xbox One sold just 100 consoles all across Japan. Compare this to the PS3, a system that is coming up for 10 years old and has almost no new games being developed for it, but still sold almost 3,000 units. You know you’re in trouble when a machine that’s almost a decade older than yours can still outsell you by 300 to 1! It seems we could soon see the birth of a modern Betamax.

Photo : Nesster on Flickr

There are a number of possible explanations.

Firstly, there is the issue of brand loyalty. If you look at cars, televisions, home appliances and so on, you’ll consistently see Japanese brands amongst the top sellers. The only possible exception to this rule is in the mobile phone market, where the US giant Apple and Korea’s Samsung continue to maintain a high degree of dominance.

Simply put, many consumers in Japan trust a tried and tested domestic brand like Sony or Nintendo far more than they do an “outsider” like the Xbox’s North American manufacturer Microsoft. Indeed Microsoft’s other big product of the moment, besides computer software, the “window’s phone” has also struggled to gain traction in the Japanese market.

There may be more to it than simple brand loyalty though. It’s also a question of gaming tastes. As we know, Japanese gamers have very different expectations to American or US gamers when it comes to what makes a good game.

For example, if we look at the fighting game genre. Animated, almost cartoony fighters like Street Fighter and Tekken seem to have far more appeal to Japanese consumers than the blood and guts of a Mortal Kombat. Likewise for action and adventure games. Horror fantasies like Resident Evil (known as Biohazard in Japan) or Silent Hill have always proved more popular than the gritty realism of a “Call of Duty” or the real world dynamics of a “Tomb Raider”.

Photo : Alper Çuğun on Flickr

And then there’s role-playing games. It’s probably fair to say that Japan pretty much set the standard for RPGs and continues to do so. From the early days of Sega’s Phantasy Star series, through to the global phenomenon that was Final Fantasy VII in the mid-nineties, and right up to today, Japan continues to lead the way in this gaming genre, and the consumers just can’t get enough. For every one familiar video game I see on the shelf in my local Tsutaya store, I see literally dozens of Japanese RPGs, their cases adorned with various cutesy anime style characters. Almost all of these games seldom see the light of day outside of Japan where they are very much a niche market, and highly sought after by collectors. You’ll need to have pretty high Japanese language abilities though to have any idea what’s going on!

There’s also the issue of marketing and understanding your customer base. In this regard Microsoft badly misjudged the mood of gamers, especially in Japan.

Anyone who has ever visited the likes of Akihabara in Tokyo, Nipponbashi in Osaka, or any of the other “electric town” districts dotted around Japan will know that the market for second hand games in Japan is huge. During the development phase, Microsoft, in what seemed to be an act of utter contempt for their customers, announced that the console would use DRM (digital rights management) software, to prohibit gamers from using second games on their consoles. Additionally it was also announced that the console would require a 24 hour, continuous internet connection to function.

Day 2 - Super Potato in Akihabara
Photo : JoshBerglund19 on Flickr

Gamers in Japan, where almost every game I have ever bought has been second hand, were rightly outraged. Sony, never slow to capitalize on a competitor’s mistake, released a video outlining the “complex procedure” gamers would have to follow in order to play second hand games on PS4. The video showed one Sony executive taking a second hand game out of its case, smiling and handing it to his colleague and saying “here you go”. His colleague, face beaming equally brightly, placed the disc in the console and started it up.

Just days later Microsoft was forced into a humiliating climb down, removing all traces of DRM from their system as well as re-enabling offline playability. However, most commentators agreed that, certainly in the Japanese context, by the time they backed down, the damage was done.

Finally, and perhaps most fittingly was the price point. It is often said that Japanese consumers don’t mind paying a bit more for quality goods. The ongoing success of boutique department stores like Takashimaya and Hankyu are a testament to this. However, at the same time, consumers here know a bargain when they see one. They are also acutely aware of when something doesn’t live up to its valuation. Retailing at around 10,000 yen more than the PS4 at time of launch, the Xbox One badly misjudged the market once again. When you are going up against a proven domestic brand, in a country where you are already struggling to gain traction in the market, you must be realistic in your pricing!

Photo : Ricky Brigante on Flickr

Personally, I hope Microsoft can turn it around. The quality of games coming out of Sony has certainly dropped off in recent years as games become bigger budget affairs based more on flashy graphics than on depth and playability. Like any market, gaming needs competition to drive innovation. However, with sales figures in freefall, Microsoft have it all to do. By the way, if you don’t know what a Betamax was, ask your parents!

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