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sinha said:

It's clear Japanese tastes are often quite different from those of the rest of the world, based on the global best-selling software charts


The Japanese are going to stick with Mario, Final Fantasy and Pokemon(!) no matter how good American games are.


Although these games have sold well, the general lack of enthusiasm for American games ensures the 360 will remain well behind the Wii and PS3 in Japan.

It's not that Japanese gamers do not appreciate the good quality of American games.  It's more of an issue of character design.  A lot of, if not most, J gamers are turned off by characters that look like from American comics or that look too realistic.  They generally prefer prettier and anime-ish characters at the expense of realism.  The developers of Blue Dragon knew this, and they adapted nicely for J gamers.  

Another reason is that FPS isn't all that popular among them for some reason, at least not as much as in the US.  There has to be more quality titles of other genre, such as RPG/Puzzle/Simulation for XBOX to succeed in there. 

The bad reputation about XBOX's hardware reliability didn't help either.  The level of reliability that average J consumers expect is quite high and MS hasn't met the expectation.  The problem of scrathes on gamedisk and the MS's detached response about this matter also left a bad image. 

It's a failure of MS's business strategy.  It's just wrong to assume that their strategy that worked well in the US will work well in Japan.  But I see that MS knows this very well already and is doing their best to fix it. 

No, it's not going to stop  'Til you wise up
No, it's not going to stop  So just ... give up
- Aimee Mann