As a company they should, I just really don't think it will make a difference. The Japanese are very loyal people who support there own. Microsoft would have to do something absolutly amazing to have a chance, with the PS3 success and then PS4 next gen, I don't see it happening. As with all great debates very curious to see how it all turns out. We still have a long way to go this gen. Very exciting time to be a gamer.

Yes, they should. There's a reason of why MS has fought so much for the japanese market, and winning this generation there isn't it.

No. Would you abandon a line of revenue?

I think Microsoft really needs to come out with a lot of first-party games that appeal to a Japanese audience. Sony doesn't have to do this so much. Look at the stats.

Sony only has three Japanese games (Gran Turismo 5 will soon join the list) that sold more in Japan than Blue Dragon (Microsoft's biggest IP in Japan)

1. Gran Turismo 5 Prologue 0.57m
2. Hot Shots Golf 5 0.52m
3. White Knight Chronicles 0.37m
Rest: Western games or niche Japanese games that don't sell well

It is very clear that Sony heavily relies on Japanese third-parties to sell the system for them (in Japan). M$ doesn't have this luxury. Since M$ can't trust that major third-party titles will remain exclusives (ie. Tales and Star Ocean), they gotta team up with Japanese developers to create new first-party IPs (like Blue Dragon, Lost Odyssey and Infinite Undiscovery). M$ is going to have to go above and beyond Sony's first-party efforts in Japan. They have to go with the Sega strategy. Win over market share in Japan with a strong lineup of Japanese first-party games. But is M$ going to have the patience to do this? I doubt it. It's going to take a lot of investment and a lot of time to do this. But every multinational corporation understands that if you want to expand your market, that time and financial investment is necessary.

You can't just pay off Japanese publishers to release timed exclusives. You have to make the effort to build a proper first-party lineup in Japan. Square-Enix is not going to make an exclusive Final Fantasy or Kingdom Hearts for you. Konami is not going to make an exclusive Metal Gear Solid for you. If you want something done right, sometimes you gotta do it yourself (publish games for Japanese developers. Don't rely on other Japanese publishers to do the work for you in exchange for a moneyhat. Not an efficient way to spend money).

Secondly, it wouldn't hurt for Microsoft to market their western games more and market them effectively. I suppose it might help. Why not? Though it seems like historically, western games don't move hardware in Japan. Even with Crash selling 1 million+ in Japan, I doubt many Japanese gamers said, "I MUST buy a PS1 to play this game!" (like they did with FF7 and what not). GTA4 sold 330k on the PS3 in Japan (ranked #11 in JP PS3 sales) but honestly how many Japanese gamers were like, "zomg, I must buy a PS3 just to play this very violent western game!" No. It's more like, "ah look at that violent western game that broke records in America, seems cool, I'll buy it for my PS3." (meaning they bought the PS3 for Japanese games, western games are just gravy). There probably are Japanese 360 gamers who are like "zomg, I must get a 360 to join the fight with Master Chief-san!" or "yes Marcus Fenix is a bad ass mofo! I'm going to buy a 360 right now!" but these are the hardest of the hardcore gamers in Japan.

However, by hyping the western gamers properly and making them seem appealing to a Japanese audience, you're adding one more positive to the console's overall library in the minds of the gamer. And that counts for something. Sega focused on building a strong overall library (it wasn't like they were just pushing 1-3 killer apps) and building the hype for that library on the Saturn and it worked. It was pretty successful. Didn't beat PS1 but hey, they sold 5 million+ in Japan (and the number would have heen higher if Sega didn't quit the 32-bit game prematurely) and they beat Nintendo over there. So the focus for M$ should be to build their overall library and build the hype for their overall library. If M$ can eat the losses in Japan. Unlike Sega (who couldn't eat the losses from their failed western Saturn venture).

I think that if MS is not loosing money in Japan, then they have no reason to leave. It's not like they shipped over 5 millions XBOX360 and only sold about 1.20 millions. If those 1.20 millions get them a little extra money in there pocket so it's a good deal. But I really doubt that the XBOX360 will change anything in Japan unless NATAL gives those Japanese something they were really looking for. Some solutions I could come up with but that are practically impossible are: make an exclusive FF, DQ or Pokemon for the XBOX360, any other JRPG that it's not FF or DQ on the Xbox360 will not help.

I don't think that there is any way to tell if they lost money on that market.  Advertising is expensive anywhere these days, and the 360 sells cheaper there than in the U.S., so profiting on the system is questionable.  However, 360 is more successful there than the X-Box was, so they are making inroads into the market. 

However, everyone keeps coming back to jrpgs as the differentiating factor.  Wii sold well even before DQ and PS3 is only now coming out of a huge rpg drought - and still outselling 360 4 to 1 (LTD).  I think there are other was MS could break in besides securing FF or DQ as exclusive.  Sure those would be the quickest ways, but they are also NOT going to happen.

Wii is on a league of it's own. Wii has Mario and that new controller that makes everyone so crazy that MS is working on NATAL and PS3 working on that new controller(forgot the name). I don't know if they are loosing money or not in Japan, but if they are not, then there is no reason to leave. The reason why everyone keeps coming back to jrpgs is only because on the top 10 selling software on the Xbox360 in Japan, 6 of them are RPGs. Halo 3 is 11th, Gears of War 24th. So JRPGs might be the solution for Xbox360 and I really believe that if a FF or DQ game were to be exclusively on Xbox360, the system would sell a lot more around the release of those games.

i think more than a million sold is above any expectations they had coming off the original xbox and with all the exclusive and timed jprgs on the 360 before, if all that couldn't push the 360 to a more proper position in japan, after ff13 nothing will. So for now any sales out of japan should be a bonus for them at this point.

At the end of the day, M$ have 8.5% of the current gen home console market and 10.6% of the current gen home console software market. They`ve built up a nice little niche for themselves in the Japanese market. The 1.2 million figure looks bad but not so much when you convert it into a percentage ad realize just how much the home console market over there shrunk compared to last gen.

A rough comparison of last gen to this gen in Japan.

The Wii has been out in Japan for 36 months so I`m going to use the first 36 months in each console`s lifespan as a comparison.

Wii`s first 36 months (Dec 06 - Dec 09): 8,927,960
PS3`s first 36 months (Nov 06 - Nov 09): 3,964,722
X360`s first 36 months (Dec 05 - Dec 08): 888,983
Wii Gen 36 months total: 13,781,665

PS2`s first 36 months (Mar 00 - Mar 03): 12,266,129
GC`s first 36 months (Sept 01 - Sept 04): 3,450,953
DC`s first 36 months (Nov 98 - Nov 01): 2,202,203
Xbox`s first 36 months (Feb 02 - Feb 05): 468,793
PS2 Gen 36 months total: 18,388,078

If we go by these figures, this home console gen is 75% the size of last gen. So 25% smaller. And keep in mind that the Wii owns like 60+% of the current gen. That doesn`t leave much pie for the so-called `core consoles`compared to last gen. The PS2 after 3 years has more than double the Ps360 figures combined in Japan. It`s clear that the tastes of the Japanese gamer are drastically changing. Though with PS3 gaining momentum in Japan as of late it`ll be interesting to see how ground the so-called `core`market can make up now.

So 360 has 8.5% this gen whereas Xbox had only 2.5% last gen (after 3 years). Big improvement. As of late though, the 360 has been on a downward trend so that 8.5% will shrink. After a superb August with Magna Carta II and Dream C Club moving hardware (it beat PS3 that month to boot), it was all downhill for the 360 in Japan when the PS3 slim launched and hardware share went down to 5-6% post ps3 slim. The 360 needs fresh blood in Japan (and that`s where M$ should be coming in with first-party IPs like Blue Dragon, Lost Odyssey and some new ones but they won`t. They want the third-parties to do everything). Shmups and visual novels aren`t going to be enough to give the 360 significant hardware boosts anymore. You need something bigger than that. And Bayonetta`s software sales were strong on 360 but it didn`t give it much of a hardware boost since it`s multi-plat. Only the truly hardcore crazies would buy a 360 just to play 100% rated Bayonetta as opposed to 95% Bayonetta. Software wise, the 360 is still performing very well though post-slim. It`s clear that they have a loyal following of hardcore gamers that will continue to support 360 software.

the 360 has sold over 1 million consoles in japan.
the frist xbox did not even sell a 600k. so MS is doing a good job in japan