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OTBWY said:

I think it mostly has to do with the games themselves and how these appeal to the Japanese market. You do have some outliers like Call of Duty that are starting to do surprisingly well, but in it's totality the games Japanese people play are either Arcadey or RPG(like). If you can appeal with games like this, in tandem with a versatile device or console that conforms to the lifestyles of these people, you can sell well. Do I think Sony, with its action oriented cinematic games and a big black powerful box can do well in this market? No. Sony's eyes are fixed to the west.

Nail on the head.

 

Their exclusives nor the form factor of the console appeal to the Japanese market anymore.  Most of Sony's success there for the PS4 has been from 3rd party efforts.  With the PS5, most of the Japanese focused 3rd party games will also be on Switch.  The big difference for them is that the PS5 can only play on a TV natively while the Switch can do that and serve as a portable gaming device.  Also Nintendo's 1st party games actually sell in Japan as well.

 

The mobile market also plays a huge impact, and is another big factor.  This is a given for any dedicated gaming device however so it goes without saying.  With that in mind, there are more than enough gamers that want more traditional jrpg experiences and the like to maintain a very healthy presence when handled correctly.  The PS5 is heading in a totally different direction however and the Switch already had that sector of the market on lock.  If Nintendo decides to make a Switch 2 (they will), this trend will likely continue.



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