Microsoft Sets Sights on Sony’s Home Turf in Console Clash

Two significant companies in the battle of next-generation gaming devices are heading in opposite paths.

With its new consoles and network services, Microsoft Corp. is attempting to entice enthusiasts in Japan. Meanwhile, Sony Corp., based in Tokyo, relocated its PlayStation operations to California in 2016 and has grown the United States into its largest single market.

In Japan, where Nintendo Co.’s Switch reigns supreme with a family-friendly selection of titles, new Xbox and PlayStation gadgets are likely to face an uphill battle.

However, Microsoft’s strategy of focusing on the world’s third-largest video-game business, which includes services that can be accessed on a variety of platforms, could pay off handsomely. Because the Xbox has almost no footprint in the country, there’s plenty of room for it to grow.

“If it takes the correct measures for years to come, the Xbox has a possibility to become Japan its second-largest market after the United States,” said Hideki Yasuda, an analyst at Ace Research Institute in Tokyo. “Sony’s focus is shifting away from the game, and fans are noticing.”

Sony shares jumped as much as 1.2 percent in Tokyo trading, bringing their year-to-date rise to almost 24 percent.

After the PlayStation 4’s poor success in Japan, Sony has prioritized the US market, according to employees who begged not to be identified since they were discussing internal affairs.

In the online black market, Sony’s PlayStation 5 is outperforming Xbox.

According to Sony data, global PS4 sales increased to over 113 million from 87 million for the PS3. According to Famitsu, a Japanese video-game magazine, the console sold fewer than 10 million units in Japan, less than its predecessor. According to Macquarie Group Ltd. analyst Damian Thong, the United States accounts for 35% of the video-game unit’s income, compared to 10% for Japan.

Inside The 2019 Tokyo Game Show

At the 2019 Tokyo Game Show, attendees play on Sony PlayStation 4.
Kiyoshi Ota/Bloomberg/Kiyoshi Ota/Bloomberg/Kiyoshi Ota/B
According to Sony spokeswoman Natsumi Atarashi, any notion that the firm is shifting its focus away from Japan is false and does not reflect the company’s strategy. “Our home market remains of highest importance,” she stated, noting that the PlayStation 5 will be released first in Japan.

The competition between Sony and Microsoft has spilled over into the stock market.
The failure of the Japan marketing team to sell as many PlayStation 4 consoles as projected has frustrated the U.S. side, according to a senior source inside PlayStation headquarters in San Mateo, California. When addressing internal topics, the person asked not to be identified.

As a result, according to numerous PlayStation employees in Japan, Japan has been left out of the planning for the PlayStation 5’s promotion. Employees in Tokyo claim they have been left in the dark while waiting for orders from California.

Former employees claim that developer support teams in Japan have been cut by a third from their peak, and that a number of game designers’ rolling contracts at PlayStation’s Japan Studio, one of the unit’s oldest in-house software ateliers, haven’t been extended. Employees in the California headquarters said the PlayStation business doesn’t need titles that exclusively perform well in Japan.

After a boost in gaming demand forecasts, Sony is on the rise.

Both of the PlayStation 5’s primary online promotional events took held at 5 a.m. in Tokyo, making them more accessible to American and European fans. However, some sections of the events were not translated into Japanese. In addition, Sony opted to standardize its PS5 control scheme, requiring Japanese gamers to utilize X to confirm and O to cancel, much like the rest of the world. In a country where circles represent positives and crosses represent negatives, this breaks a 26-year precedent.

Sony Playstation 5 (PS5)
Sony PlayStation 5 (Sony)

Local merchants claim they haven’t received nearly as many PlayStation 5 first-batch units as they did the PlayStation 3, which had a limited first manufacture run.

Morningstar Research analyst Kazunori Ito stated, “It is analyst opinion that PlayStation no longer sees the Japan market as significant.” “You have to inquire about the Japanese market if you want to get their thoughts on it since Sony won’t talk about it otherwise.”

According to government data, TV ownership in Japanese households has been declining for years. According to Ace’s Yasuda, this makes the market less appealing. A user must have a TV or monitor to play games on the PlayStation, while certain titles are also playable on PCs.

According to Serkan Toto, a Tokyo-based game expert, the PlayStation 5 will sell fewer copies than its predecessor.

“Many PlayStation 4 owners in Japan will eventually upgrade to the PlayStation 5,” he said. “How strong the PlayStation team in Tokyo will be in pushing the needs of Japanese customers to the American headquarters will be largely determined by how strong the PlayStation team in Tokyo will be in pushing the needs of Japanese customers to the American headquarters.” “Unfortunately, given the existing power balance between the US and Japan, I can’t expect much.”

To be sure, the PlayStation 4’s global success indicates that Sony’s plan hasn’t backfired. Hiroki Totoki, the company’s chief financial officer, predicted on Oct. 28 that the PlayStation 5 would sell more than 7.6 million units in the first five months, surpassing the popular PlayStation 4’s performance in the same period. Totoki stated that the long-term goal is to sell as many units as the PS4.

During the pandemic lockdowns, the company’s PlayStation Plus membership service, which is available to owners of Sony consoles, had a record surge in customers.

Black Market for Video Games
On EBay, the PS5 is outselling the Xbox One ahead of its November 12 arrival.

ShelfTrend is the source of this information.

Microsoft, on the other hand, sees a market opportunity in Japan, where its next-generation consoles will be released on the same day as the rest of the world. Microsoft didn’t start selling the Xbox One in Japan until over a year after it was released in the United States, which contributed to the console’s poor performance in the Asian market.

Microsoft faces a significant problem. According to Famitsu, the Xbox One only accounted for 0.1 percent of console sales in Japan this year until November 1, compared to 10.1 percent for the PlayStation 4 and 89.8 percent for Nintendo’s Switch.

Xbox Series…

Microsoft is hoping that the Xbox Series S, the world’s tiniest Xbox, can help turn the trend. According to Ace’s Yasuda, previous consoles were criticized for being too huge for Japanese living rooms.

According to Sarah Bond, who oversees relationships with game producers across the Microsoft gaming ecosystem, the business has been ramping up negotiations with Japanese game developers about launching titles on the Xbox.

One of these companies is Koei Tecmo Games Co. If the Xbox demonstrates ongoing interest in Japan, Hisashi Koinuma, president of the Japanese publisher, said he’d consider releasing more titles for the console.

Furthermore, there is evidence that Microsoft is looking to make purchases in the country, though it has yet to strike a deal with a major player. Several game makers in Japan, from small to large, reported it had approached them about purchasing their companies. They asked not to be identified since the sessions were private, and they declined to elaborate on what was discussed.

When asked about the possibility of Microsoft buying a Japanese company, Jeremy Hinton, the manager of Xbox operations in Asia, said the company is always open to talks with artists who are a good fit. He stated that acquisitions are a possibility, but that no details are available at this moment.

“Japan has traditionally been an isolated area of the Xbox globe, but it looks Microsoft is shifting that landscape,” said Katsuhiko Hayashi, a representative of Famitsu Group.

The emphasis isn’t solely on the sale of consoles. Hinton said that the firm is also hoping to attract Game Pass Ultimate members, which includes the xCloud game-streaming service. This program, which can be used on other devices as well as the Xbox, offers more than 100 all-you-can-play games for a monthly charge, and is aimed at the country’s burgeoning mobile gaming population.

While Japan’s video-game business has shrunk in comparison to China and the United States, Microsoft claims Japan is still the largest in terms of per-capita spending.

But, according to game-industry consultant Toto, worries remain about whether the US corporation will be able to infiltrate it given its lack of success in the past.

“Microsoft will continue to struggle in Japan, and I don’t see why the next Xbox should perform any better than the prior ones,” he said. “All signals point to Nintendo remaining king in Japan for the foreseeable future, and I’m not sure why Microsoft is still so enamored with the country.”

It remains to be seen whether he is correct, or whether the American corporation can pry open the door to a market that has long eluded it.

“Microsoft will never be able to overtake Sony as Japan’s No. 2,” Ace’s Yasuda said, “but it has begun to make improvements.” “A big tidal wave always begins with a slight shift.”