That's a good point although it's not quite the same. It's all about getting back what or more than you put in.

MS can make an educated guess on how much to spend on marketing in Australia and how much they expect to get back in profits.

Australia has a population of around 21m, maybe 22m so it's a relatively small market.

But as you correctly said it still a market.

It's all about the potential. Japan with 128m people (and a top world economy by GDP)  is a far larger market and the marketing there over the years have been huge to reflect this with little reward.

So whereas Australia might turn a dollar in profit many find it hard to see where that dollar will come from in Japan, hence the question that so many financial analysts are asking is this and why MS release a response last year.

http://www.eurogamer.net/articles/2011-08-18-ms-responds-to-xbox-360-in-japan-concern

Japan has around 128 million people. Around 1 in 100 people in Japana haven purchased an XBox 360

USA has around 300 million people. Around 1 in 10 people in the USA have purchased an XBox 360. 

LOL. You do know that all of those 1.6 million are just collectors right? No one in Japan has the Xbox 360 as their only console....

If the Xbox 360 got discontinue and games stopped being made for it, I doubt PS3 or Wii would get ANY increase in sales...Software will increase though.

pshht. Theres at least one person with only a 360. I figure a decent chunk of the 360s are sold to the thousands of US troops stationed in Japan

Because M$ never understood the Japanese market, it is quite different than the western market.

First of all the ps3 and xbox 360 are basically the same. Has the same game why would the japanese not support their own console. Not just based on their 'nation' pride but Sony has already made a name for themselves from ps and ps2.
People bring out XBOX 360 had so many JRPGs, but who would of guess that the ps3 would have less JRPGS than the 360...... I wonder why ...... M$$$$$
1 problem with these exclusivity didn't help MS was because they were release after the ps3's release, almost after 1-2 years the release of the 360.
Infinite undiscovery 2008
Lost odyssey 2007
Blue dragon end of 2006
Who knew that jrpg developers will not support the ps3 and will be exclusive to the xbox 360. Everyone already bought the ps3 in japan.

Well its obvious that there is potential for growth. MS is just being persistent.

Keep in mind gen over gen the 360 did wayyyy better then xbox

I would imagine its to keep Japanese developers interested in the 360. Although the 360 may not sell well in Japan, a lot of Japanese games sell very well on the 360 in the west. I think I remember MS saying that a substantial amount of the top 5 games on XBLA are Japanese developed (Castlevania:SOTN). Plus some JRPGs have done decently on 360 like Star Ocean the last hope, Tales of Vesperia, Final fantasy, etc. Fighting games like Street fighter, blazblue, king of fighters, etc which are all japanese developed are doing pretty well on the 360 as well.

So overall, MS has a good incentive to keep the 360 atleast somewhat alive in Japan to keep the developers developing games for it.

My understanding is the platform has carved a nice niche for fans of Cave shooters etc. A sale is a sale.

Is there any proof Xbox is losing money in Japan?

I think its possible they're a seeing a profit there thanks to Gold subscribers, Kinect, etc. If they are losing money there, its probably a negligible amount in the grand scheme.