I think they're going to have to go big or go home. If they want to be successful in Japan they have to be prepared to lose a lot more money to do it. Somewhere in the neighborhood of $500 million.
The games they're paying for now are having an impact but there simply aren't enough of them. Whenever they release a big game it does increase sales but then there's nothing to help carry the momentum for weeks afterwards. If I were them I'd pay out about $375 million to have 20 games made with average to smaller budgets ($15-$20 million which includes advertising), and on top of that have another $125-$150 million spent on 4-5 bigger games ($25-30 million). The sheer number of games would grab the attention of Japanese gamers, especially if at least one or two of the bigger ones were from Square.
They would have to do all that plus sell the 360 at cost in order to have an impact (in my opinion).
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