The Xbox will sell for 34,800 yen ($263) and will be accompanied by 12 games, including titles from major Japanese developers such as Sega and Konami.
Sony in September cut the price of the PlayStation 2 in Europe and Japan, with the Japanese version now selling for 35,000 yen--a difference of about $1.50. The other rival game system, Nintendo's GameCube, sells for 25,000 yen ($189) in its home country.
The Xbox has been a strong seller in the United States since its mid-November launch, but the console's chances overseas have been the subject of tremendous debate. The Xbox is set to go on sale in Europe on March 14.
Microsoft is the first American company since 3DO in the early 1990s to try to crack the game hardware market. The company has set up a separate division to develop Xbox games tailored to Japanese tastes and court Japanese developers. It also produced a smaller, reconfigured version of the Xbox controller for the Japanese market.
Analysts have said that even if the Xbox generates only modest sales in Japan, the product can still succeed, as the island nation accounts for only about a quarter of the $20 billion worldwide video game market.
"I think the general assumption for the gaming industry is that without success in Japan, you can't have a successful product, but I'm not convinced that's true," IDC gaming analyst Schelley Olhava said shortly before the Xbox's U.S. launch.
The 12 games on tap for the Xbox's Japanese launch will include revamped versions of American titles such as "Dead or Alive 3" and "Project Gotham Racing," said Mitchell L. Koch, Microsoft's corporate vice president of worldwide retail sales, plus Japan-only titles such as Sega's "Jet Set Radio Future."
Koch declined to specify how many units would be available at launch but said the total would include 50,000 "special edition" consoles--priced at 38,800 yen--with a different colored case from the U.S. version, adapters for HDTV video and Dolby 5.1 audio, and a key chain signed by Microsoft Chairman Bill Gates.
Koch said the Xbox marketing campaign in Japan would start Feb. 2. "It'll be very similar to the U.S. launch in (that) there'll be a great retail presence, with lots of demo stations in stores, and an aggressive TV (advertising) campaign," he said.