The Xbox 360 has been a failure in Japan, which is strange when you consider how much it dominates the North American market, as well as parts of Europe. The console is unlikely to cross the two million sold mark in Japan (which is how much the original Xbox sold there), and has been soundly outsold by its competitors in the form of Nintendo’s Wii and Sony’s PlayStation 3. It continues to see terrible sales, and many stores in Japan carry neither the console or games for the console today in 2013.

In a conversation with IGN, famous Japanese game creator Keiji Inafune – the mind behind Mega Man, Onimusha and the upcoming Vita game Soul Sacrifice – commented on why he thinks Xbox 360 failed to catch on in Japan.

“When I was working at Capcom, I supported Xbox 360 all I could,” Inafune told IGN. “I love PlayStation, but I also enjoy Xbox and I think it’s not a bad console personally. I understand Japanese users don’t prefer Xbox 360, but if I was asked why, I wouldn’t be able to put a finger on it.”

Inafune proceeded to touch on something interesting. “Probably one of the reasons is because PlayStation is a domestic brand in Japan,” he continued. “As a Japanese [person], I think it’s only natural you feel closer or attached more to domestic products and I find myself being that way too. When you see two products with similar features and one is from your own country and the other is from foreign countries, it’s easy to pick the one from your own country.”

He concluded: “From this perspective, Xbox is made by Microsoft in the US, so it’s not a domestic product. It’s only natural that you want to support your domestic products. If there were more Xbox-exclusive games out there, things may have been different, but usually a title is developed for multiple platforms so that’s not the case.”

The question now – with two failed consoles in Japan – is if Microsoft will bother to launch its yet-unannounced third generation Xbox console, codenamed Durango, in Sony's and Nintendo's home territory. Hopefully, we’ll find out soon.

http://ca.ign.com/articles/2013/04/01/why-did-xbox-360-fail-in-japan

He right they are loyal to domestic companys. xbox will never sell in japan they need to focus on the markets their strongest in.

Isn't that the same reason why the 360 is selling much better than the competition in the US?

Because they would rather support their own industries than help foreign ones grow. Good idea, since tariffs aren't allowed to be high anymore

The same reason 360 sells better in US lol

I think its tough to point to 1 overall reason, but there are plenty of reasons why it failed in japan other than the one stated.

- initial failure rate of 33% for 360 at launch,(which becomes much higher when you ask how many of those are still alive 2 years post launch)

- perhaps lack of JRPGs.

-Or the simple tech available at launch. Blu-ray versus external hd drive, wifi versus external wifi adapter, large hard drive versus separate purchase of swapable hard drives, browser vesus no browser, free online gaming versus pay.

I dont want to turn this into a fanboy war, but from a product perspective maybe the real question should be "why did 360 do so well in the states and europe".

My answer: 1 year head start.

The high failure rate certainly didn't help, everywhere, but the damage was less in the US due to Microsoft's strong marketing in the region.

"many stores in Japan carry neither the console or games for the console today in 2013"

This is patently not true. The number of stores that do not carry any 360 games is miniscule.

BluRay is not a major factor in Japan. Even today, in 2013, the market share of bluray is much smaller than it has been in the US.

The general feel of the console and its games is more Western than the PS3 or Wii. Of course, the entirety of the games market is shifting to a more Western flavor, and even the PS4 feels like a more Western proposition than any other Japanese console, so we'll see what happens next gen.

This is from IGN. And we all know that it doesn't get better than that. Now that doesn't mean that IGN is good, just that the rest are MUCH worse. This is after all, gaming journalism we are talking about here.