Microsoft's Maruyama Talks About Xbox 360 Challenges in Japan

Microsoft's next-gen console to be set at a "reasonable price"--will it have an edge over the PlayStation 3's frequently touted high-tech graphics?

As Microsoft Corp. prepares to face up to Sony Computer Entertainment Inc. (SCEI) again in the battle of the game consoles, a lot of eyes are on the Japan market. Not only is the company home to SCEI and many of the world's leading game software makers but it's also the one major market when Microsoft's current generation Xbox has fallen flat on its face.

Last year Microsoft racked up sales of about 21,000 Xbox consoles in Japan, according to figures from sales data provider Media Create Co. Ltd. During the same 12-month period, SCEI sold about 1.4 million PlayStation 2 consoles.

So the company has to climb a steep hill if it's to avoid the same fate. In charge of leading the climb is Yoshihiro Maruyama, general manager of Microsoft Co. Ltd.'s Xbox division. We had a time to sit down with him just before Microsoft's Xbox 360 Summit event on Monday in Tokyo to talk about the challenges the company faces in launching the Xbox 360 in Japan.

Gamepro: A lot of today's announcements focus on new games. Is support from Japanese game developers key for the launch?

Yoshihiro Maruyama: One of the lessons we learned the hard way is that we didn't have a strong lineup from Japanese third parties. There are quite a few reasons. One is that we came too late to the Japanese market. When we launched in February 2002 PlayStation 2 had been around for almost two years so it was a quite tough, uphill battle anyway and many Japanese publishers didn't see a chance of us being a major player in the Japanese market. So some supported us in a lukewarm manner but most didn't touch our console. But we [now have] 38 publishers and 45 titles and to be honest we actually have more than what we are announcing today: close to 50 publishers developing about 100 titles.

GP: How did you convince the publishers that things are going to be different this time around?

YM: Fortunately, many game industry veterans are still operating their companies and they have been in the business for close to 20 years. For the first 10 years with Famicon and Super Famicon it used to be Nintendo then PlayStation came from nowhere and took the market. So many veterans know what happened in the past. The dominant console changes from time-to-time.

But many people who have only been in the industry a few years have only seen Sony as [the big player]. For the last two generations it's been PlayStation and some people have become nervous that Sony has been too dominant for too long. And unlike the U.S., the Japanese market has always been a winner-takes-all market. We need a very strong support from the third party [game developers] to win in the Japanese market.

GP: This time around with Xbox 360, PlayStation 3 and Nintendo's new console, how do you see the market developing? Are you going for number one?

YM: Of course, my goal is to be number one in the Japanese market. Unless you become the number one console you cannot keep making money so people who don't have the top position usually abandon their console in the first couple of years. So to have a profitable business in Japan, my belief is that we have to be number one.

To make it happen, I don't think we can keep counting on just the third parties. We need to have a very strong first-party [Microsoft-published] console-defining contents. When Sony [launched PlayStation] it was initially Namco who helped to launch the console with a very strong lineup of racing games and fighting games so Sony's first party was weak. Over 10 years Sony [built up] a very strong golfing game, Hot Shots Golf, and GranTurismo so they had some very strong first-party games.

So I'm always hoping some Japanese publishers play that role for us, but more Japanese publishers want to hedge their risks by making their games available across different consoles. When Xbox 360 launches, even though some go to PlayStation 2, the titles will be next-generation games so the look and feel of the game will be totally different.

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