Xbox Nation dials into Japan’s slow-drip acceptance of Xbox Live
Clearly, Microsoft’s current strategy in Japan is not a success. The company needs to find a different tack—a special something that demonstratively sets Xbox apart from the PlayStation 2 or GameCube. In America, that “something” is Xbox Live, Microsoft’s integrated online gaming service. Microsoft has sold 350,000 Xbox Live starter kits in the first few months of availability, almost doubling its initial expectations. More important than the sales figures, however, is the perception. Xbox Live is something exclusive to Xbox. PlayStation 2 and GameCube don’t have anything like it—and are unlikely to launch a comparable service anytime soon. Much of Microsoft’s E3 presentation focused on affordable pricing, the XSN line of sports games, and core upgrades to the service’s functionality and user-friendliness. Increasingly, Xbox’s success is tied to the success of the Xbox Live service.
But in Japan, Xbox Live has been met with the same cold shoulder that greets almost anything Xbox related. A mere 24,000 copies of the startup kit have been sold since its January release. Given the general failure of anything Xbox related in Japan, this underwhelming performance should come as no surprise. But hell, 28,000 people shelled out nearly $200 to pick up Tekki (the Japanese Steel Battalion). Xbox has no “casual” fans in Japan. Any gamer who’s picked up one of the big black behemoths is fairly hardcore, and probably interested in PC gaming to boot. Xbox Live might not be a system-selling success here, but surely current Xbox fans should be more interested. What went wrong?
The blame most likely lies at the feet of differences between the Japanese and American telecommunications industries. Though Microsoft’s draconian “broadband or bust” policy has worked in the United States, the state of Japanese broadband is quite different from that of the States. It’s not that broadband service isn’t available; on the contrary, broadband is now available most anywhere. It’s that broadband hasn’t been available. Before 2001, high-speed internet service wasn’t available outside of Tokyo and Osaka. In late 2001, NTT (Japan’s telecommunications monopoly) had its telephone lines deregulated, and ADSL service exploded across Japan. Anyone who wanted broadband could now sign up and, though response has been healthy, the countrywide broadband “explosion” has yet to materialize. Why isn’t your average Japanese Internet user signing up?
One reason might be cost. Hooking up to the Internet in Japan is an expensive proposition. You have to pay upfront just for the right to own and use a telephone, and it’s not cheap, either. After World War II ravaged Japan’s infrastructure, NTT instituted a 72,800 yen fee (about $600) on all new telephone-line installations. The infrastructure has long since been rebuilt, but the fee, not surprisingly, remains.
The huge initial cost just to use a telephone line has caused an increasing number of young Japanese people to exclusively rely on portable telephones called keitais. Keitais are a generation or two ahead of portable phones in the United States and offer e-mail, Web-surfing, built-in MP3 players, cameras, and much more. Moreover, the cutthroat competition between keitai companies means there’s no sign-up fee and that the phones themselves can be snagged for dirt cheap, if not free.
But whether you use an expensive landline or an inexpensive keitai, you have to pay per-minute or per-packet connection charges to the Internet. Unlike in the United States, where local telephone calls are free, every call in Japan carries a per-minute charge. NTT charges 10 yen per 90 seconds, or about $4 an hour. In fact, ADSL service in Japan is marketed more as an “all-you-can-use” service than a speed-based service. Sure, says Yahoo Broadband, the 12-megabit downstream bandwidth is nice, but waittilya geddaload of this! No per-minute charges! But before you can enjoy all that abundant bandwidth, you must purchase the aforementioned landline. Most young 20-somethings, Xbox Live’s target audience, are going to heavily think it over before taking the broadband plunge.
The ever-present issue of cost means that Internet usage in Japan has grown upon divergent evolutionary lines from the United States. Whereas the U.S.’ free local calls and flat-rate pricing encouraged an always-on, shop-till-you-drop atmosphere of Internet usage, Japan’s ever-ticking money meter trained Internet users to get on, get what you need, and get off. Widespread keitai usage has led to a general low-graphic, utilitarian-site aesthetic. Japanese people are happy with their current style of Internet usage, and see no real reason to upgrade to broadband.
In a nutshell: Despite the now-widespread availability of broadband, Internet culture and usage in Japan is still lagging five to seven years behind the United States. Gamers in the States have been playing online since Doom supported 2400-baud modems. Meanwhile, the inescapable high cost of connecting to the Internet kept a similar community from forming in Japan during the 1990s. Online gaming is just not something people think about. It’s not part of the gaming culture. Keitais ship with built-in support for Java gaming, and everyone’s downloading single-player puzzle games. For Japanese people to change the habits they’ve learned—to adopt broadband—they’ll need a reason to change the fundamental way they use and perceive the Internet. They’ll need to see that killer app—something they can only do with broadband.
Xbox Live is not that killer app. For all this talk about broadband adoption rates, per-minute connection charges, and cultural perceptions—when you get down to brass tacks, Xbox Live in Japan kinda sucks. The one interesting title, Phantasy Star Online, was packed in with the Xbox Live Starter Kit. That was a smart move. Less smart was following Online up with absolutely nothing at all.
Since the service launched five months ago, Japanese Xbox Live owners can currently play: Whacked!, Capcom vs. SNK 2 EO, Muzzle Flash (a military action game), and Thousand Land (a quirky puzzle action game). Why on Earth would anyone buy an Xbox Live starter kit to play these games, let alone endure the cost of setting up a broadband connection? The answer is, they wouldn’t. And thus, they haven’t.
So what can Microsoft do to increase Live’s popularity in Japan? Though attracting new gamers might be difficult, increasing the adoption rate among current Xbox owners isn’t an impossible task. The first, most obvious solution is simply to put out games that people would want to play online. True Fantasy Live Online, Tekki Online, and even Halo 2 should all find a small-but-dedicated audience. Quality software—whether Japanese or American—is the first line of attack. Nobody wants to pay-to-play online crap, even if it is Japanese-developed.
The second cure to Xbox Live’s Japanese woes is simply to wait. In another year or two, broadband will have found a larger audience, online attitudes will have begun to change, and the next generation of compelling Xbox Live software will be available. Fortunately, if there’s one thing Microsoft Japan has learned to successfully cultivate, it’s patience.
Copyright © 2004 Ziff Davis Media Inc. All Rights Reserved. Originally appearing in Xbox Nation.