Live Issue... PS3 changes tack as Xbox takes lead

A curious thing happened in the gaming world earlier this year. After a lengthy period of consumer indifference, Microsoft suddenly announced that its Xbox 360 line had sold out in Japan. It sounded scarcely believable, in a country that is home turf for gaming heavyweights Nintendo and Sony.

In the weeks since the August announcement, gaming analysts have watched Xbox 360 consistently outsell the Sony PS3 in the land of the rising sun. Sony, say many, must be smarting. The company has responded by switching ad agencies; appointing Fallon in a move that will see it focus more on its own product, rather than third-party software.

Sony’s move is ironic because Xbox’s own success appears to have been driven in large part by focusing on the games. It has made strong efforts to convince gaming developers that its console gives them global sales potential. The approach has resulted in three of the key role-playing titles so beloved by Japanese gamers being released on the Xbox 360 this summer. With Xbox 360 ramping up its European push, Japanese game developers have been persuaded that they can piggyback on the console’s marketing investment to sell more titles to gamers in Western markets.

“Xbox has been offering them better in-store presence globally,” explains a source. “They can make more money from developing Xbox 360 games, and it is a quicker platform to develop games for.”

A hefty price cut has also strengthened the Xbox’s position, isolating the PS3 as the most expensive console in Japan. And Microsoft has aggressively courted Japan’s gaming and blogging community through such features as Xbox Inside, an Xbox Live feature that provides Japanese-language updates. Sony’s struggles in the online arena extend beyond its outreach to netizens. The company has been prepping its Home digital interface for two years, while Xbox Live has already built a 14 million-strong global presence. OgilvyOne Japan digital lead Hironobu Kawai points to online as the key area where Sony can bolster its PS3 marketing. “Online gaming is becoming popular so they definitely need to improve that.”

It is hard, meanwhile, to ignore the 300-pound gorilla in the room. Nintendo’s Wii remains the top-selling console in Japan thanks to a marketing strategy that has seen it attract non-traditional audiences such as women and families. Xbox and PS3 are waking up to these new demographics, realising that the battle for supremacy is now being fought amid an aging population.

And, when it comes to broadening a console’s appeal, its marketing is clearly critical. “If the target is more wide-ranging, advertising is more important than the console,” says Kawai. “When the target is heavy gamers, the focus is on the console itself. Like Wii, it requires an education process.”

While Xbox has prospered in recent months, there are many who believe that Sony’s PS3 can ultimately prevail. The console’s technological capabilities mean it can function as Blu-ray player. And if Home lives up to its buzz, it may yet provide a link between online and mobile gaming in a market where people want to play games on the train. As Fallon Tokyo managing partner Phil Rubel says, Sony must convince consumers that its “capabilities allow it to play a bigger role in people’s everyday lives beyond typical gaming.”

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