Microsoft is looking to break into the Japanese gaming market

Microsoft may have been in the console business for almost 20 years, but the company has never really managed to make a dent in Japan, a very important market for video games that is still dominated by Sony and Nintendo. But as a new console generation is kicking off this week, Microsoft may be interested in adding Japanese developers to its Xbox Game Studios division.

Great to be back in Japan with the team talking and listening to amazing studios and publishers about 2020 and beyond. Really strong energy and excitement here about gaming's future.

— Phil Spencer (@XboxP3) January 20, 2020

There’s obviously a renewed interest in the Japanese market from Microsoft as we’ve seen with Xbox head Phil Spencer’s numerous trips to Japan in recent years. Back in September, Spencer said that Japan was Xbox’s fastest-growing market, with “more players on Xbox devices, games, and services than at any time in our history in the market.”

Spencer’s statements don’t really mean much if Xbox is starting from very low in Japan. According to the Japanese video games magazine Famitsu (via Bloomberg), Xbox One consoles accounted for just 0.1% console sales in the market between January and November 1, trailing behind the PlayStation 4 (10.1%) and the massively popular Nintendo Switch (89.8%).

Still, Microsoft may be looking to strengthen Xbox’s position in Japan with new studio acquisitions. The company already has good relationships with Sega, with the publisher bringing some of its games to Microsoft’s Xbox Game Pass subscription service, but Jeremy Hinton, head of Xbox operations in Asia told Bloomberg that Microsoft was open to the idea of acquiring local studios:

When asked about potential purchases of Japanese companies, Jeremy Hinton, head of Xbox operations in Asia, said Microsoft is always open to discussions with creators that are a good fit. He said acquisitions are a possibility but there are no announcements to share at this time.

If Microsoft’s Xbox One console was released in Japan almost a year later after its launch in other markets, the company’s new Xbox Series X and Series S consoles have started shipping in 40 Xbox markets today, Japan included. It remains to be seen if Microsoft launching an affordable console with the Series S will help the company gain ground in Japan, though the $299 console may ultimately not move the needle in a significant way.

“Microsoft will continue to have a hard time in Japan, and I don’t see any reason why the next Xbox should do better in Japan than the previous models,” game-industry consultant Toto told Bloomberg. “All signs point that for the next years, Nintendo will stay king in Japan, and I really don’t understand why Microsoft is still so obsessed with Japan,” he added.