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Like I've said, the Xbox 360 doesn't have mainstream appeal over there. It appeals more to the hardcore. 360 owners buy more games for their consoles than other owners in Japan. Just look at the software to hardware attach rate below. And the sales aren't lopsided in the direction of western games either. The top 5 on the 360 are all Japanese games. The 360 base in Japan tends to enjoy a mix of both Japanese and western games looking at the sales.

http://www.vgchartz.com/jweekly.php

X360 5.17
DS 4.87
Wii 4.21
PS3 3.62
PSP 2.36 (I didn't know they pirated this thing in Japan too, I thought piracy was taboo over there)

And the software attach rate is growing because software sales are keeping pace while hardware sales are going towards a downward trend. More evidence that the core group of 1.2 million 360 gamers are continuing to buy lots of games. If the 360 didn't have hardcore niche appeal, do you really think the owners would continue buying the games?