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The 360 has a number of factors going against it.

1: The original xbox. Which didn't have many Japanese games at all.

2: Hardware reliability

3: Lack of positive brand recognition

4: The changing to a more casual Japanese market. Microsoft did the hard work and got lots of jrpg's on the system. I applaud what they're trying to do. But They're stuck between a rock and a hard place. They have the hardcore games but they don't have the casual games. They need both.