But the software giant faces a whole new set of challenges starting this week as it prepares to sell the Xbox outside North America. The console goes on sale Friday in Japan and arrives in Europe on March 14.
The Japan launch is seen as particularly important. But Microsoft faces a number of cultural and business barriers to establishing the console in a country that accounts for nearly a third of the global video game market.
Japanese gaming tastes differ widely from American and European preferences, with whole genres, such as dating games, that don't even exist outside of Japan. Trade barriers could make it difficult for Microsoft--the first American company to enter the video game hardware market since the swift flop of the 3DO system more than a decade ago--to do business on an equal footing. And the Microsoft name, while familiar in a computing context, may have little cachet for gamers accustomed to Japan-based market leaders Sony and Nintendo.
But Pat Ohura, managing director of the division Microsoft set up to sell the Xbox in Japan, is confident the company can deliver. The hardware has been revamped for Japan, with a smaller version of the bulky controller pad and a limited-edition version of the console packed with extra goodies. The software will also be different, with third-party publishers and Japanese developers recruited into the Microsoft stable to produce titles that will resonate with Japanese gamers.
Ohura talked with CNET News.com via e-mail about the upcoming launch.
Q: How do Japanese gaming tastes differ from other regions, and how is Microsoft addressing those differences?
A: Though there are many game titles that sell well both in Japan and the U.S., Japanese gamers have their own tastes. For example, "NFL Fever" may sell well in the U.S. but not in Japan, where American football is not so popular. "Munch's Odyssey" (an adventure game featuring odd reptilian characters) is unlikely to succeed in Japan, as Japanese prefer cute characters.
To address these different tastes, each region has its local third-party partners, who develop games focused on their own markets. In addition, Microsoft in Japan is developing a number of titles, such as "Nexmix" (a mouse adventure game) and "Kakuto Chojin" (a fighting game) locally. The Japan first-party team is working on unique and original titles suitable for the Japanese market.
How much freedom has Microsoft given you to develop a separate strategy for Japan?
Microsoft has worked hard to ensure that Xbox is a truly global console. We have put an incredible amount of research and planning to make this happen. We have tailored games for the Japanese launch lineup, and we have devised specific marketing strategies that will appeal to our audience here in Japan.
For example, we have created the smaller controller for the Japanese market as well as an Xbox Special Edition to commemorate the launch here in Japan. These are examples of the strategies that the Xbox team here in Japan felt were important, and Microsoft agreed.
How will the Japanese marketing campaign differ from that in the U.S.? How much will it emphasize the technology behind Xbox?
Overall, the marketing campaign in Japan is not so different from that of the U.S. The technology is quite important, as are quality game titles and online features. Marketing entails in-store kiosks, promotional campaigns, advertising, retail events, launch events. But there are some notable differences: The game titles being promoted are different, and the exclusive-for-Japan Xbox Special Edition, manufactured in a limited edition of 50,000 units, will be sold as part of the launch campaign to create excitement among core gamers (and) early adopters.
What are the key games for the Japanese market?
We have an amazing launch lineup for Xbox in Japan. Twelve titles will be available on launch day, and 22 titles will be on sale by the end of March. Some of these great games include (fighting game) "Dead or Alive 3" from Tecmo, (adventure game) "Jet Set Radio Future" from Sega, (samurai adventure) "Genma Onimusha" from Capcom, as well as "Nezmix," "Project Gotham Racing" and "Tenku (Amped)"--all from Microsoft Studios.
DVD playback initially was a big selling point for Sony's PlayStation 2 in Japan. How much do you expect that to figure into Microsoft sales? Will requiring customers to buy the extra DVD kit be a drawback?
No, we are not thinking of selling Xbox as a DVD player, like Sony did. When PS2 was launched, it was actually the least expensive DVD player available. Since then, the price of DVD players has dropped significantly. So if somebody simply wants a DVD at a reasonable price, they can now go out and buy a DVD player. Xbox's focus is on producing great games.
Sony is working on plans to link PlayStation to cell phones and other networks. What are the connectivity plans for Xbox in Japan?
Japan has seen and continues to see phenomenal growth in broadband. Unlike PS2, Xbox is designed for broadband network connectivity from the ground up. We believe that online will change games like 3D did in the last generation, and Japanese developers like Sega and Atlus are committed to creating new types of online games. Compared to our initiative, what Sony is doing seems quite limited.
What's your goal for market share in Japan?
While we don't share projections, we are committed to the global success of Xbox and specifically to Xbox in Japan. We're a long-term player here, and, while Microsoft is a strong company in Japan, our success here was built slowly. We believe Xbox will follow that paradigm.
What trade and/or tariff barriers has Microsoft faced bringing the Xbox to Japan?
To date, we have not faced any trade or tariff barriers...The imported products were all treated with the appropriate harmonized tariff classification, and we have not encountered any surprises at the import so far.