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Microsoft's Bid to Close Gap in Japan's Gaming Market Faces Hurdles

Strategic Insights

— 2 min read

Microsoft, attempting to gain ground in Japan's $1.4 billion game console market where it is outsold eight to one by Sony, is relying on a new role-playing game, "Blue Dragon," with characters designed by Akira Toriyama, creator of the popular "Dragon Ball" series. The company aims to increase its Xbox 360 titles in Japan to as many as 50 by year-end, from six at its December launch, and offer a cheaper version of the console to boost sales. However, the release of "Blue Dragon" and cheaper consoles may come too late, as Sony and Nintendo are set to launch their PlayStation 3 and Wii consoles in November.

Key Takeaways:

  • Microsoft is counting on "Blue Dragon," a role-playing game with characters designed by Akira Toriyama, to narrow the gap with Sony in Japan's game console market.
  • The company aims to increase its Xbox 360 titles in Japan to as many as 50 by year-end, from six at its December launch.
  • Microsoft will offer a cheaper version of the Xbox 360, priced at ¥29,800, without a hard disk drive and accessories, starting November 2nd.
  • Sony and Nintendo are set to launch their PlayStation 3 and Wii consoles in November, in time for Christmas, which may make it challenging for Microsoft to gain traction.
  • Microsoft has sold 160,000 Xbox 360s in Japan since launching the console 10 months ago, compared with sales of 1.3 million PlayStation 2 units in the same period.
  • The company aims to ship 10 million Xbox 360s before the PlayStation 3 is released, but faces significant competition from established players in the market.

Statistics:

  • $1.4 billion: The size of Japan's game console market.
  • 8-1: The ratio by which Sony outsells Microsoft in Japan's game console market.
  • 15%: The percentage of video games sold in Japan last year that were role-playing games.
  • 68 million: The number of units sold of the best-selling role-player game, "Final Fantasy," created by Hironobu Sakaguchi.
  • ¥29,800: The price of the cheaper Xbox 360 model without a hard disk drive and accessories.
  • ¥39,785: The price of the Xbox 360 model with a hard disk drive and accessories.
  • ¥59,800: The price of the PlayStation 3 console.
  • ¥25,000: The price of the Wii console in Japan.
  • ¥16,000: The new price of the PlayStation 2 console in Japan after a 20% price cut.
  • 100 million: The number of units sold worldwide of the PlayStation 2 console.
  • 160,000: The number of Xbox 360s sold in Japan since launching the console 10 months ago.
  • 1.3 million: The number of PlayStation 2 units sold in Japan in the same period.
  • 1.2 million: The number of PlayStation 3 machines planned to be shipped in Japan this year.

Sources:

  • Pavel Alpeyev, "Microsoft Counts on 'Blue Dragon' to Narrow Gap with Sony," Bloomberg, undated.
  • Enterbrain, "2006 Report on the Video-Game Industry," 2006.
  • Macquarie Securities, David Gibson, "Video Games in Japan: A Tour of the Market," undated.
  • Nomura Research Institute, Yuuta Sakurai, "Video Games in Japan: A First-Half Summary," undated.

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