Land of the rising Xbox

Nintendo, Sony and Sega have made Japan king of the game console. Can Microsoft make a dent in Nippon?

Published December 17, 2001 8:30PM (EST)

The Xbox gets a bad rap in Japan. Talk to industry watchers here and you start to draw a rather bleak picture: Japanese homes are too tiny for the oversized console. Japanese gamers stick to native brands. Japanese tastes are different -- even industry titan Electronic Arts, the biggest game publisher in the United States, has a weak presence here. "In Japan, I've never met one single person who likes the Xbox," says Arka Roy, a Tokyo-based developer.

Yes, in Japan, which accounts for about a third of the world market, the Xbox is definitely facing an uphill battle. But one thing needs to be kept in mind: It hasn't been released yet. That doesn't happen here until Feb. 22. Until the console has been available for a few months, it's probably too soon to write it off. In a Computer Entertainment Software Association poll of visitors to the spring Tokyo Game Show, answers to "What game machines do you want to buy?" came out 39.5 percent Xbox, 39.6 PS2, and 22.2 percent GameCube. Not all the signs point downward.

Still, the task of making a big American console a hit in Japan is, undeniably, a daunting one. It falls to Hirohisa "Pat" Ohura, managing director of Microsoft's Japan subsidiary. Ohura talked with Salon about the challenges and potential rewards facing Microsoft as it rolls out the Xbox in Japan.

One obvious problem with the Xbox compared with the PlayStation is that there just aren't a lot of titles, either third-party or exclusive first-party. What is Microsoft's approach to the sheer size of the PlayStation market?

Xbox is a new platform. Therefore we have zero installed base today. At launch [Feb. 22], we will have probably close to 12 to 20 titles ... Currently we have about 80 companies signed to make titles for the Japanese market. Within that 80 there are about 150 titles in development. So as the hardware reaches the users and as the installed base grows, we will have enough titles for Xbox.

The biggest thing we're trying to do with Xbox is we're trying to give our users an experience they've never had with the other [console] platforms. The graphics of the Xbox are dramatically better compared to the other platforms. One good wind that is carrying us more is the TVs inside the houses are upgrading to [satellite broadcast] digital format and the resolution is getting a lot better. Therefore the people at home can realize the power of the graphics of Xbox. The other factor is sound ... [With the Xbox] when you shoot a rocket you can hear it flying from left to right, or when playing a horror game you will sort of sense or hear someone creeping from behind you. So those are the new things we're trying to have users recognize that they cannot experience with other platforms.

Also, the fact that we have a hard disk built into every machine, which is probably the biggest reason for its size. We think it is absolutely important that this happen because we have given liberty to game creators to utilize memory in a very free way. Up until now, if we were to call the creator an artist or painter, he had a certain size screen that he could paint pictures on. So let's say he paints a family portrait on a white screen, but he says, "Oh, I forgot the dog" -- well, [in the past] he had no space to do that, and he had to do the painting all over again. But with Xbox, with the unlimited memory, he can add the dog, he can add the Christmas tree, and he can add the presents ...

The fact that Xbox supports broadband will also change online gaming itself. Up to now, the concept of online gaming was, people connect to the Net and they go in and they play a certain game. People may have a PC, a PS2, or a Dreamcast. And once they go to the server, they will have to play [down to] the lowest specification. They will have to play probably on the graphic card level of the PS2 or the Dreamcast -- even if the PC has a better graphic card. So even if you own super hardware, once you go on the Net you aren't able to utilize your power. Our thinking of online is we want to sort of make a dedicated world for Xbox where only Xbox users can go in. And we will utilize our technology that we have groomed in the Windows world, like our matchmaking service.

We'll have a sort of Passport technology. When a user plays a game, the Passport ID will [remember] their high score. The server will know, say, Steve-san is very good at action games and sports but very bad at role playing. If you were to go into a matchmaker room and ask for a partner, the server will recognize your ID and try to set you up with a very identical ID. Right now a regular matchmaking system will just call anybody who is on the floor, so you will have to play sort of a kindergarten boy who is very bad at playing games. You will not have fun, and he will not have fun. But our system will enable users to have the same level and play the game.

We want to make the world like the Disneyland world. People will come in and experience the same kind of fun every time they come into the room. The experience will always be the same. And in order to do that it was very essential for us to make a dedicated Xbox-only world.

What is the possibility that, long term, the Xbox will succeed in the United States and not do as well in Japan, and you'll have a split market for the first time in the industry, where Sony pretty much dominates in Japan and Microsoft pretty much dominates in North America?

It is for sure a fact that [Microsoft] Japan will have a harder battle to fight than the U.S. For one, the first-party development in the U.S. -- the U.S. has probably over 700 or 800 people doing in-house Xbox development. The sad thing is that historically it's very difficult for U.S. titles to be successful in Japan. So all the goodies made in the U.S. I may not be able to use. Whereas Sony and Nintendo do development here in Japan. So for me, I have a bigger enemy to fight than my U.S. counterpart.

You talk about targeting hardcore early adopters. It does seem as if they will be drawn to the Xbox because of its horsepower. But does the horsepower really matter once you get beyond that first group? What about a schoolteacher who doesn't care about tech specs? All that horsepower ... for her, it's just going to go onto a regular TV set. Is she really going to be able to tell the difference between the gaming quality on the PS2, Xbox and GameCube?

Once we get the hardcore users, the only way for us to grow is to aim for the light users. [One way] is to bring in those who are not [currently] counted as game users with [our] vision of online ... With [the growth of] online gaming, creators can make games that have not yet been made possible.

If you compare creativity of Japan and the U.S., the U.S. has always led Japan. But in the gaming world, Japan has led the U.S. -- by far. We think the biggest reason that has happened is all these creative people were movie producers. They wanted to make a movie, a story. All of the top-notch gurus in the U.S. had a place to go called Hollywood. In Japan, the game industry was Hollywood. So all of the top-notch creators are in the game industry. But these people always wanted to make movies.

So let's say Steve and I get in a big fight in this room, and we get in a big struggle, and the tea falls off [the table], and the Xbox goes on the floor, and you hit her [PR rep] by mistake and her nose is bleeding ... [Imagine if that happened during an online game.] But in today's [console] game world, since there's no hard disk, there's no cache [to remember user actions]. Once we go out of the room and come back, the room becomes clean. So there's really no time flow in the story. A movie is something you can just sit and watch for two hours and have fun. But if you imagine, if you can get interactive with the movie, the fun will double, triple, or maybe quadruple. So what we think all these great creators in Japan and the U.S. may be doing, in a couple of months or a year, is utilizing the power of Xbox and making that a reality. We are hearing from a lot of the creators that with the hard disk there's a lot of things that they can achieve with Xbox that they could not have done with the other platforms.

In the November issue of Wired, an article suggested that one of the motivations for doing the Xbox was that PC sales were declining and that was a threat to Microsoft's future. What's your response to that notion?

I think that PC sales declining is a temporary thing. There's really no industry that is increasing today. A lot of people have sort of talked about all of these [new] devices coming out ... you know, the cellular phone, the iMode, and that these will replace the PC. We do not think so. The more of these machines will come out, the PC's importance will increase. And PC sales will also increase. So the decline of the PC has nothing to do with the Xbox. The Xbox project started a long, long time ago, when PC sales were very, very high. So I don't think that is a fair comment.

This is the first time in the game industry where you've had Sony's approach to third-party developers being aped by somebody equally powerful. Nintendo's approach has been focusing on first- and second-party titles. Sony's approach has been focusing on third-party support. Now, suddenly, there's an equally powerful company doing the same thing with the third-party approach. Is that what you're doing? Are you copying the Sony approach of attracting as many third-party developers as possible?

We are trying to approach all potential third-party people. We are trying to bring in as many titles as possible. However, we're not just saying, "Make titles." We're also making sure that they utilize all of the differentiators of Xbox.

Making hardware like this is obviously a money-losing prospect, the hope being that it will pay off in the future. How long is Microsoft willing to lose money?

We've entered this business because we think we will be profitable at the end of the day.

End of the day or end of the decade?

[Laughs.] End of the project. Anyway, how serious are we? In just one year, Bill [Gates] has come twice to the Tokyo Game Show. That is how serious he is. This October when he came, actually, he came one day early. He had a meeting with Prime Minister Koizumi. And he came a day early in order to see our group, see the games, see the excitement. And he has taken a big risk: coming to Tokyo Game Show, walking around the floor -- not the press stage but the user stage. That's how serious he is. It is a big project. Microsoft has entered the home with the PC, but the PC has never entered the living room. That's one place we're not in. If you go into an ordinary living room, there's the Matsushita, there's the Panasonic, the Sony, the Sharp, the Victor, the NEC, there's Rohm, there's everybody else but not us.

What about this idea that, uh, people don't want Microsoft in their living room? Do you think there's going to be any backlash?

I don't think so. If you go to work, there are people carrying Sony Vaios, and if you go home there's a Sony stereo system. There's a TV made by Sony. There's a phone made by Sony. [The value of the] brand, I think, is what benefit does that particular device bring into their living standard.

What's the next stage for the Xbox? A British magazine that apparently had a scoop said you guys were planning something called the HomeStation.

No, that was a hogwash article. It all depends on what the users will demand. Microsoft has never forced technology on the users. We are very lucky to have this huge installed base of Windows users and Office users, and we get feedback, and the Microsoft research group does all kinds of studies, but we have never added functionality that is not needed by the end user. We always say, Windows ME, Windows XP, whatever people thought -- we need this this this this -- was in the next version. Same with Xbox. We'll ship the box, we'll make the box online, we'll build the server, and we'll listen to user feedback. And then maybe users will say, "We definitely want a browser." We'll probably put a browser inside the box. Users will say, "Why a dedicated server? Let's go with the Internet." And if we think it is safe for the users to do that, we'll probably do that. Right now we believe that people in the living room should not browse on the Internet, because graphics are still bad on the TV, and it's not compatible to the Web, and if you want to browse through the Web, a PC is a much better device. But if the users tell us, "We want to do this," we have all the technology to do it. We just have to ship a DVD with Internet Explorer Xbox version -- little code change -- and boom! we could do it. But today we believe that that is not what the user wants.

By Steve Mollman

Steve Mollman writes about technology for publications around the world.

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