TOKYO Chairman Bill Gates explained Microsoft's strategy for cracking the Japanese market with his company's Xbox gaming console in a keynote address Thursday (March 29) at the Tokyo Game Show before an audience of 4,000, including hundreds of journalists.
"The videogame business is a worldwide business, but we see Japan as one important center of the business," Gates said. "A third of game revenue comes from Japan, and a high percentage of creativity comes from Japan."
Microsoft has prepared a dedicated Xbox controller for the Japanese market, worked with NTT Communications Corp. to prepare a broadband infrastructure, headhunted a software developer from Sony Computer Entertainment Inc. to head Microsoft's 100-person game studio in Japan, and allied with Sega Corp. to supply game titles and collaborate on online game development. Gates said that Xbox was designed from the beginning as an online gaming platform.
One the day prior to the opening of the Tokyo Game Show, Microsoft and NTT Communications announced a strategic alliance to establish a dedicated broadband service in Japan for Xbox game players. Though details haven't been finalized, the service will be a closed network, said a spokesman for Microsoft's Xbox business division. The network will not necessarily provide an Internet connection, the companies said.
Xbox may raise the profile of broadband communications in Japan, which has lagged the United States in comparison, said NTT Communications president Masanobu Suzuki. "Finally there is a sign that [broadband] will take off," Suzuki said. "If attractive applications like Xbox are combined with the network, it will grow fast."
NTT will provide Microsoft with access to ADSL broadband services at rates of about 1.5 Mbits per second. The service, which will be developed with Microsoft's Xbox Division in Japan, is expected to be launched sometime in early 2002. The two companies said they will also collaborate on services based on a fiber optic network, which will provide connections of up to 100 Mbits/s.
While Gates outlined a bright future for Xbox in Japan, some attendees and analysts at the show were less sanguine. Takayasu Ichikawa, senior analyst in the game market research section of Media Works Inc. (Tokyo), said Xbox will fight an uphill battle against Playstation 2, shipments of which have already surpassed 10 million units, according to Sony.
"As Xbox was announced after Playstation 2, of course it has higher specifications, but what is important is game titles," Ichikawa said. "Thus far, I don't see any game title which could become a tractor of Xbox. The Xbox future will depend on how many powerful game creators Microsoft can involve in Xbox."
Some at the show said they were disappointed in the picture quality of Xbox because they said they could not see a big difference between those and the Playstation 2. "If quality jumps from 1 to 100, the difference is great," Ichikawa said. "But if the improvement is from 10,000 to 10,100, the difference is not very impressive."