Abstract

Microsoft, Nintendo, and Sony remain the biggest players in the video game console space. While all three companies have achieved worldwide success, Microsoft’s performance with the Xbox brand in Japan is an outlier for its historically poor sales numbers dating back to its 2001 debut. The purpose of this thesis is to unearth the various cultural distinctions inherent to the Japanese gaming industry that Microsoft must consider to gain a stronger foothold in the country, as well as diagnose the biggest issues facing Xbox with Japanese consumers. To accomplish this, several cultural frameworks were used to assess the differences between the United States and Japan at the country level and the video game industry level. Interviews were also conducted with professionals in the video game industry to gain additional insights into Microsoft’s shortcomings in Japan. After compiling the information, it is evident that the magnitude of the differences between the U.S. and Japan on a cultural and economic level are vast enough to outweigh the commonalities they share as two of the largest world economies. The differences seen at the country level parallel those at the industry level. A handful of solutions were created to help Microsoft gain a competitive advantage in Japan, which includes tailoring the selection of games on Xbox Game Pass to target a Japanese audience and securing exclusivity deals with Japanese developers to attract new audiences. Even though Microsoft is not positioned to become a market leader in Japan due to the dominance of the Nintendo Switch, there is room for them to build a sizeable, reliable consumer base with Xbox Game Pass and exploit the differences between the U.S. and Japanese gaming industries.