Foreigners in Japan can broadly be categorized into two distinct groups.

Group A respects the local culture. They're sensitive to Japan's social peculiarities. They dress well. They act civilized. They bring an attitude and liberated cool that many Japanese people aspire to. Aspiration. These people do well in Japan.

Group B comes to Japan thinking that by virtue of being foreign, they're automatically cool and superior. But actually, they're seen as big, oafy, sock-and-sandal wearing embarrassments that no one really wants to be associated with. They start to develop the paranoia that people here hate them. "There's nothing wrong with me... everyone's just racist". They don't do well in Japan.

This analogy can be applied quite closely to the success and failure of foreign companies in Japan.

Some examples:

Starbucks is part of group A. Starbucks crept almost spookily into Japanese urban culture. The management is almost entirely Japanese, and the operation is strategically tied to a large Japanese conglomerate, which has showed the American parent the way here. Result? The world's most popular Starbucks is in Shibuya, Tokyo. A Starbucks is on every corner in Tokyo, surprisingly brimming with young trendies, drinking its overpriced goop. Starbucks has succeeded in Japan.

Other examples of foreign firms in group A include:

- Disney. Japan is by far Disney's second largest market in the world.
- Designer brands: Japan is Gucci and Vuiton's largest global market.
- Product from the major Hollywood film studios.
- Premium food brands: Fortnum & Mason, Harrods, and so on.


Fear not, we're about to get on topic.

Xbox is a prominent member of group B. It's big, ungainly, ridiculed. It even sort of smells different. It probably also carries herpes, doesn't wash often, and steals pocket change from grannies. In short, Japanese people are suspicious of it.

Why?

Presumably, the Xbox guys will have conducted extensive research on this one. Focus groups, management consultants, head hunted strategists, and so on. They could blame dozens of problems, but one will find that most of them stem from two major issues.


1. Adaptation. Xbox has simply failed to adapt to the peculiarities of Japan. What's more, Xbox Japan tend to complain that "we can't do anything, Redmond makes the big decisions".

This accomplishes three things:

1. It kills accountability. These guys will eventually move onto Konami, Namco, wherever, and they won't really care, because the fate of their business wasn't in their hands.

They don't feel responsible. They have someone to blame if and when it all goes under.

Second: it means that self-defeating (or worse, no) decisions are concocted again and again. Culturally insensitive decisions. Decisions that group B people make. A joke of a retail presence. Yucky green packaging which revolts Japanese design sensibilities. Games with about as much cultural appeal as a dating sim in America. Socks with sandals.

Third: It further develops the perception that Xbox Japan is a non-Japanese entity. You lose that, you lose a million other things. Approachability, loyalty, trust. The whole gamut.

But the biggest problem is next.


2. No gaijin allure. Xbox as a brand, has squarely failed to capture the 'gaijin allure' of successful foreign products. It has failed to position itself as an aspirational product, in the way that other the successful foreign brands have.

Now you might think, can Xbox really position itself as an aspirational product?

Yes it can. As a piece of hardware, Xbox is a superior product to the competition. It's high-end, hi-tech, a leap forward from PS2. Fact.

But it's not being marketed as such.

Japanese women flock to international supermarkets to pay 30% more for a foreign branded food, because they've gotten it into their heads that by buying foreign tea or jam, they're buying better. More stylish. More sophicated.

There isn't a Japanese clothing brand in the nation today, that competes with the allure of Prada, Hemes, Vuiton, or Gucci. These foreign firms have successfully positioned themselves as higher quality, better looking, cooler, however you define it -- superior.

Whether it's by intention or accident, current Xbox marketing in Japan just positions the machine as some kind of alternative to PS2.

Xbox people. Please listen. You cannot beat PS2 at its own game in Japan. Ever.

So what happens? You change the customer. Get them to move on. Upgrade. How? Use a different approach. Endless brand ads in Famitsu, trains full of Blinx posters, and bill-boards in Akihabara are a waste of space, money, and time.

Don't go anywhere that PS2 is. It just makes your brand look stupid.

Stop going after the same exclusives. Invest in your own. Ports of Onimusha and Metal Gear Solid? Who green-lighted that one? Christ.

I remember how at TGS 2001, Japan Xbox head Miyata-san commented that 'Xbox continues the spirit of PlayStation.' No it doesn't. PS2 continues the spirit of PlayStation. Find a new market, or change the old game. That's how Sony beat Nintendo. They didnt try to ape them. They changed everything. They changed the business, they changed consumer expectations, and suddenly Nintendo woke up a dinosaur.

A word of caution: spending someone to death, does not make them love you.

Make Xbox alluring, sexy, 100 times more aspirational and cool than it is now. Find places that Sony hasn't even thought of. Nothing is too big or small.

The super-stylish Xbox cafe, in Tokyo's most expensive, boutique office building is a great start. Opposite the cafe are the Asian HQs of Merrill Lynch, UBS Warburg, and Prada. The cafe is flanked by Harry Winston and a Conran Shop. A queue of smart young punters who frequent the surrounding shops, is always waiting by the entrance for seats. Others line the outside, peering in at Xbox demos playing on plasma screens within a dark, stylish interior.

This might not seem like a big deal, but it's the only time six months that I've seen anyone aside from the hardest core Japanese gamers, take an interest in Xbox. That's a start.

The cafe is a hit. The message it gives is clear. The execution is stylish. And Sony hasn't thought of it. Build from that, not from PS2.

- Justin Keeling
EMail Justin