rea and rewrite

An analysis on the Microsoft’s Xbox One Marketing Failure in Japanese Gaming Industry

Davenport University

BUSN 520

March 29, 2015

Table of Content

Synopsis about the marketing issue…………………………………………………........……….3

What makes this is a marketing issue?.............………………………………………...…..……..4

What macroenvironmental issues led to the current situation?………….………………………..7

Prediction of recovery (if a negative) or success?...........................................................................8

Is the organization handling this marketing issue appropriately?…………………………....……9

Conclusion…………………………………………………………...………………...…...……10

References……………………………………………………………...………………………...11

Give us a synopsis about the marketing issue.

When one thinks about Microsoft as a company, above all else, Windows Operating System usually comes to mind. It is and always will be what made Microsoft a multi-billion dollar company. With almost all PC being run by Microsoft Windows in the entire world, one would think Microsoft is pretty successful, especially its marketing considering its global gasp in computer software operating systems. A success in one sector or a specific product does entirely entail success in another sector. Like all huge tech companies, Microsoft has taken upon itself to branch out within the technological business and join the likes of Nintendo, Sony and Sega, into the gaming world. On the year 2000, Microsoft introduced its very own gaming console, the Xbox to the gaming community for the very first time. It’s success lead to the multiple evolutions of the Xbox, and Microsoft’s place and acceptance into the very finicky gaming industry (Rick, 2013).

The Xbox and Xbox 360, the predecessors of Microsoft’s most current and advance game console, the Xbox One, were successful during their production period. The success of the previous console, pave the way for its new baby brother. The Xbox, through trial and error, have developed so many software accessories, in the form of Xbox live, which allowed players from the entire world to play against each other. No longer would one need to be physically present to play another player. Within the confines of one’s house, a gamer can play just about anyone in the entire world without having to lift oneself up from their chair. The latter, the Xbox 360 was then introduced and blew everyone’s minds away with intense hardware capability, rendering images with extreme realism. This hardware spec, combined with the world wide multiplayer capability, lead to a greater success for the Xbox 360, outselling its other competitions, such as the Wii U and the Sony’s Playstation 3 (Rick, 2013).

The Xbox One introduced recently last year, brought forth, modern multimedia capabilities, a 1020p HD realistic rendering technology, and an extensive multiplayer server, capable of hosting any games with multiplayer capability. It seems that this new console will be a successful hit as its previous brothers did. However, to much of Microsoft’s surprised as well as the gaming community, the system has not fared well, especially in the global gaming market industry. In Japan specifically, Microsoft continuously tried to push the consoles to the gaming population of Japan. Although pretty successful in North American, the original Xbox and Xbox 360 saw lackluster sales during their lifespan in Japan. In fact, Microsoft’s Xbox One has sold on a cumulative global basis of only 3.4 million units compared to its rivals which sold more than 5.4 million units so far (Nelva, 2015). So the biggest question of all would be, why does Microsoft continue to lose profit and keeps pushing its product in Japan? It’s quite simple; Japan is a huge gaming market and a haven for huge profits and potential gain. However, and unfortunately, it is not a simple market to enter into, especially with Microsoft’s marketing approach. What marketing error could be the source of the problem then? Everything…

What makes you sure this is a marketing issue? (Be specific with your reasoning)

Sometimes a country often secedes to another country when it knows going to war with them will yield only loss and destruction. Unless of course, a weapon of great technological advancement is within grasp, then even the smallest of countries can compete and win against the largest ones. One hundred soldiers yielding, sticks and stones can be easily defeated by four people yielding guns and ammunition. In the business industry, marketing techniques such as the concept of 4P of marketing could be liken to that “weapon of great technological advancement”. Failure to utilize these concepts is similar to going to war, without weapons at all, and that’s what Microsoft has been doing with its consoles and marketing strategies in the Japanese gaming market.

For Microsoft, this is definitely a marketing issue, almost borderline marketing failure to be exact. How come? Well, first of all, statistically, Microsoft’s marketing strategy is already at a disadvantage considering 75 percent of it is already a failure. Where did I get this numerical percentage? To simply put, out of the 4P’s of Marketing, Microsoft already failed with three out of the four, way in the beginning during its initial release of its console in Japan. The 4P’s are the product itself, the place it is being sold into, the price and its promotion. Take note that, marketing is the ability to make the population aware of the product via promotion. It is also accompanied, with the ability to create product value, thereby causing the need, or the desire for the product, often determined, by the quality of the product itself, the price, as well as its location and target population (Bateman & Snell, 2013). Considering that Microsoft is a business juggernaut, and with the huge financial backing, promotion was pretty successful, and product awareness was everywhere in Japan. From the day of its initial launch in Japan, which was almost a full year after its launch in North American and European release, everyone knew of the Xbox One existence. From billboards, to mass media advertisements and store promotions, there was no one in Japan that did not know existence of the Xbox One (Tassi, 2014). Thus, the failure of Microsoft’s marketing strategy did not fail in its promotion of its product but because of its failure to create value and need from the Japanese population. So how did it fail to create value?

Microsoft forcing their product down the throats of consumers in Japan may have actually been more effective, strategically, because if nothing else, it would at least showed that Microsoft actually cared about the Japanese consumers purchasing their console. However, with the direction in which they decided to go, it is as if they decided to release console, out of spite and determination to steal money from Sony and Nintendo. Unfortunately for Microsoft, this is the home turf of these two companies, and have total grasp on the mentality of its people. Furthermore, Microsoft on the other hand, offered services engraved into its console that does not fare well and have no value to the Japanese consumer. Microsoft’s lineup of games are widely perceived as being “FPS-heavy” (for those who are not into gaming, FPS is a First Person Shooter game, which can be seen with military games where the perspective is a person’s hand with a gun and you take control of him; ie, Call of Duty) and the console itself being known amongst many people as a “Netflix gaming Machine” since it’s multimedia system revolves around perfectly streaming Netflix. This product in all its glory is centered and perfect for North American consumers. However, this product completely fails in the Japanese market considering the fact that Japanese gamers don’t care much for first-person shooter games, and that Netflix is not even officially available in Japan. Instead taking all of these factors in consideration, in which they could have acted upon it, like pushing games that Japanese population would love, they instead further emphasize what they originally offered and mass marketed the idea (Tassi, 2014). It was mentioned that, “successful product and services are those that customers perceive as valuable enough to buy” (Bateman & Snell, 2013). This statement is quite true for without value or use, an item is not worth a penny to any customer. In this case, Microsoft ignored the wants of consumers and the cultural makeup of their customer base. They push their own style and values to consumers, who care less and did not want it in the first place. Furthermore, at the price of 49,980 yen, equivalent to $490 dollars, who is going to spend that much money on a product that you don’t even have any interest to? Microsoft’s failure to incorporate the desires of other cultures other than the US gaming consumer, during Xbox One initial creation lead to its poor performance in the Japanese gaming community (Whitney, 2014).

What macroenvironmental issues led to the current situation?

The fact that Microsoft did not really consider Japan during its console creation phase, even though they planned on mass marketing their console in the country, lead to its downfall. Japan is quite an interesting country with a history of being xenophobic. Although with modern Japan, this mentality has began to dwindle down, a cultural adherence from any outside company is still a must in order to be liked and accepted by the community. Japanese people are extremely loyal to their country, and for the most part, given an option between domestic and imported product, they usually choose the ones made in Japan most of the time. One can see it from the food they eat, the cars they buy and the games they play. This is a tough hurdle that can only be overcome with product exclusivity, lower price and a product that caters to its people, which sadly, the Xbox One fails in all aspects (Nelva, 2015).

Microsoft did not really consider its demographics in Japan. This may be difficult to understand especially if one has not been there physically, but during my visit in Japan, the culture is obsessed with anything that is cute. It’s quite evident with Nintendo’s success with Pokemon as well as other things like anime. Cute characters, sell video games in Japan, which the Xbox One simply just does not have. The system does not have a Pikachu or a Mario that can appeal to the Japanese masses. Furthermore, here lies the biggest macroenviromental issue that will keep the Xbox One from being a marketing success; a lack of nostalgic appeal.

Gamers around the world, and including myself, love nostalgic gaming. (Pac man, Galactica, Pong, maybe rings a bell perhaps? If born in the US and these games I mention does not bring out fond memories of 2 bit gaming, then I will assume you are not a previous gamer) Japanese gamers, take it to whole new level. Japanese people are often made happy and satisfied, when they are brought forth by an experience that induces nostalgia. Many of the population in Japan, grew up with Sony and Nintendo. That is what they grew up with, that what is they know, that is what they like, and therefore, that is what they will keep paying to continue playing. Even if the Xbox has been around since 2002, and has capabilities that may surpass Nintendo or Sony, the system just has not made a large enough impact to bring nostalgic value (Nelva, 2015).

Do you predict recovery (if a negative) or success (if a new launch or revamping of a current product)?

Honestly, it can go both ways. Just like new models of phones which are introduce every year, new consoles are introduced every five to seven years. The success or failure of one console does not dictate the outcome of its future generations. Of course, there is no better way to start fixing the situation than in the present itself. However, the fact that, Microsoft did not even cater to the Japanese gaming consumer let alone considered them during the products research and development, will lead to marketing failure. No matter how much money a company may have to spend on promotion and marketing strategy, a failed product is already a failure to begin with. The product itself is amazing, having played it myself, it’s visually appealing and the hardware is simply superb. However, if the product does not cater to the consumer of a certain demographics, and or country, then regardless of how powerful the product may be, there is still no value from the consumer and it will not sell.

I am in the Philippines, and currently cannot access my Netflix, and I am unable to watch and stream movies from said company even though I am paying for it every month. Unless I go through some unlawful means of making the program work in this country, why bother spending money on a product that I cannot use in the first place? Therefore why would anyone purchase a multimedia gaming system that can’t utilize its main multimedia function which Microsoft extensively marketed and advertise (Whitney, 2014). Most Asian countries, does not have any affiliation with Netflix, and streaming to those countries are literally blocked. With fifty percent of Xbox One function, incapable of working in Asian countries, there is no way; the console will sell to any consumer but the most hardcore ones, who only care for its video game capability. It looks grim for Microsoft’s Asian market of Xbox One. This leads me to my next case… Is Microsoft handling this situation properly?

Based on what you've learned, is the organization handling this marketing issue appropriately?

Microsoft had its chance to learn from its mistakes during the lifespan of the previous generation of console it marketed in Japan. They already knew what worked and what did not worked in Japan. Rather than changing their game plan during the research and development of the Xbox One, they decided to stick with their old strategy and shove their products into everyone’s throat. They somehow believe that aggressive marketing will some how influence the Japanese culture to tend to their product. It has not worked before and will not work in the future.

Slashing the prices by half which Microsoft recently has done may increase the sale temporarily, but overall support will not change. It’s quite sad, considering many of the stores will no longer stock on Xbox One, ones all the units are sold (Whitney, 2014). Their hard line approach to stick to their “guns” left them without ammunition, and marketing failure in all aspects.

Conclusion

Microsoft’s console is only a failure in the Asian gaming industry, specifically in Japan. Their console is a success in the United States, considering the whole product was geared towards US gamers. I believe that the release of the Xbox One console in Japan was not fully intended for the consumers, as it is evident by the product’s capabilities and lack of Netflix and multimedia support. It seems as if, it was release in Japan to lessen the sale and take some profit from the other gaming companies, Sony and Nintendo. Is the Xbox One a marketing success in the Asian gaming industries? It is not, it is indeed an utter failure, but on the other hand, it managed to steal 3.4 million worth of units off of the other two companies in their home turf, so one may consider it a strategic success.

Reference

Bateman, T. S., & Snell, S. A. (2013). M: Management. New York, NY, USA: McGraw-Hill Higher Education.

Marshall, Rick. (2013, May 12). The History of the Xbox. Retrieved from http://www.digitaltrends.com/gaming/the-history-of-the-xbox/

Nelva, Giuseppe. (2015, January 7). Xbox Sales Discontinued by Japanese store; 50% Discounted Xbox One Sells Out in Just One Morning. Retried from http://www.dualshockers.com/2015/01/07/xbox-sales-discontinued-by-japanese-store-50-dicounted-xbox-one-sells-out-in-just-one-morning/

Tassi, Paul. (2014, November 29). Outrageously Bad Xbox One Sales in Japan Result in Executive Casualty. Retrieved From http://www.forbes.com/sites/insertcoin/2014/11/29/outrageously-bad-xbox-one-sales-in-japan-result-in-executive-casualty/

Whitney, Lance. (2014, September 25). Xbox One Sales in Japan sink even lower. Retrieved from http://www.cnet.com/news/xbox-one-sales-in-japan-sink-even-lower/