Microsoft Renews Xbox 360 Campaign in Japan

After failing to penetrate the tough Japanese video game market with the initial launch of its Xbox 360 video game system, Microsoft said this week that it isn't giving up: The software giant will triple the number of Xbox 360 games it offers in Japan by the end of 2006. Furthermore, Microsoft has bolstered its in-house game-making capability by purchasing Lionhead Studios.

"We're prepared to do everything that's needed to make Xbox 360 a success around the world, including Japan," said Takashi Sensui, who heads Microsoft's Xbox efforts in Japan. "Xbox 360 has created such a stir in overseas markets, including the United States and Europe. As the manager of Xbox operations in Japan, my task is to achieve the same success in Japan."

To date, Microsoft's video game efforts in Japan have produced lackluster results. The company had hoped the Xbox 360, with its sleek, smaller design and next-generation graphics, would finally help it crack the Japanese market. But after the Xbox 360 launch in Japan in December 2005, retailers couldn't sell all the consoles they had. In other markets, the Xbox 360 sold out immediately, and the console was the most desired gift of the 2005 holiday selling season. According to estimates, Microsoft sold only 123,000 Xbox 360 consoles in its first three days of availability in Japan. By comparison, Sony sold more than 1 million PlayStation 2 consoles in Japan during its first three days of availability in 2000.

The problems in Japan are complicated. Despite its relatively small size, Japan is one of the largest video game markets in the world. That said, Japanese gamers tend to get excited about different kinds of games than those that are more typically popular in North America and Europe. So Microsoft is bolstering its lineup to include more of the role-playing games that Japanese gamers clamor for. Microsoft also plans to add more Japan-centric Xbox Live downloads, including animated trailers.

On Thursday, Microsoft announced that it had purchased Lionhead Studios, makers of hit games such as "Fable." Lionhead employs the famous game developer Peter Molyneux, who created the "god game" genre and developed such titles as "Populous" and "Black & White." Microsoft had previously purchased Bungie, which makes the blockbuster "Halo" games; and Rare, an ex-Nintendo developer famous for "Kameo," the "Perfect Dark" series, and "GoldenEye 007."

In related news, Lucent Technologies sued Microsoft this week, accusing the software giant of infringing on a patent it obtained in 1993. According to Lucent, the Xbox 360's "out of the box MPEG-2 decoding capability" infringes on its patent for "adaptive coding and decoding of frames and fields of video." The company is seeking unspecified injunctive relief and damages. Microsoft says it's investigating the claims. Lucent currently has several other unrelated patent-infringement suits filed against Microsoft.