I think Japan in general has moved on from home consoles over the course of last gen and started focusing on handhelds. You can see how the 3DS has caught on fire over there and is getting a ton of support from Japanese developers.

No real point for MS to invest in them now. In fact MS don't even have that many western 1st party studios, let alone Japanese ones and they are dominant in the US. So I don't even think MS cares about having 1st party studios in the first place.

Would be pointless.

This gen they tried pretty much everything to get Japanese gamers on Xbox. They had Lost Odyssey and Blue Dragon as exclusives from Sakaguchi himself. Tales and Star Ocean, popular franchises were exclusive to Xbox. They took the PS3-exclusive Final Fantasy XIII.

Hell. Square Enix went pretty much Xbox exclusive through 2008 and 2009. The previously mentioned Star Ocean, followed by Infinite Undiscovery and The Last Remnant. New IPs that would have really needed that PS3 userbase.

They had games like Ace Combat and Katamari as exclusives. They even got a Monster Hunter before the PS3.

Basically, this generation JP devs put a lot of faith in the Xbox 360 succeeding in Japan. It ultimately failed in the grand scheme of things. They gave it a good go though.

Wouldnt be surprised to see the next Xbox recieve very little in Japan in terms of exclusives. Maybe the odd timed exclusive DLC

This. Japan will never be a big market for the Xbox so there isnt any point in investing money on studios that cater for a market you're unlikely to crack.

Microsoft has the most first party now adays they just prefer building studios from the ground up with talent instead of buying route like what Sony does

Microsoft brought up alot of Exclusives games for the Japanese people but still failed in japan.

Well at least Microsoft owns lost odyssey blue dragon and infinite undiscovery ips

what you guys are not seeing is that all of microsoft's efforts to gain japan support paid off in the US. For almost 3 years the 360 was seen as the definitive rpg console with a mixed of west and Japanese rpgs. Lost Odyssey, The Last remnant, blue dragon, infinity discovery, and more that i cant remember now, came on the beginning of the console cycle and helped 360 turn some ps2 rpg fans. Xbox fans like to think that halo, and gears are the reason xbox is popular in the west, far from it. It was the huge selection of games that made possible.

If microsoft completely ignores Japan, it will hurt them in the west a lot more than in the Japan. It's true, I think they will not move the needle in japan, but i think that is a cost they have to pay to not loose the ground they have gained in the west this gen. Don't underestimate the power of the JRPG :p.