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Japan has always been an obstacle for Xbox. I’ve heard some people in game publishers describe the brand’s fortunes in the country as “cursed”. This seems a little dramatic, but let’s get on with it. Some say it all started with the name.

The DirectX box – Xbox – has always been something of an unfortunate name for the territory. X is “batsu” – a cross used to indicate that you got a wrong answer in a test or something. You’ll often see Japanese people cross their forearms in an X shape at unnoticed tourists doing something they shouldn’t – a non-verbal way of saying “don’t do that”. That’s why on earlier PlayStation consoles the X and O were reversed in Japan – O for “OK” and X for “Cancel”, the opposite in the West. To the west, an X marks the spot. In the ballot box, you put an X next to the person you want to represent. In Japan most of the time X means no. The box without.

Even if you don’t buy into this cultural element, it’s undeniable that Xbox has had its struggles in Japan. Even the best-selling generation, the Xbox 360, lagged all competitors by millions of units. It’s only gotten worse since then. But it was never just about Japan as a market for selling consoles.

Games are arguably Japan’s biggest and most important cultural export. There’s an argument to be made that without Japan and the vision of eccentric toymaker Nintendo, the Western video game market might never have recovered from the crash of 1983. Of course, the recovery would have taken much longer. Japan has contributed to almost every stage of the development of video games as a hobby – and this has one key consequence: people all over the world love Japanese games.

That’s why we’re getting into the weeds with the difference between RPGs and “JRPGs.” Regardless of how dire the situation is in Japan’s domestic console gaming market, many people around the world profess a particular bias towards games made in Japan, with their unique cultural heritage and sense of tradition. Even if we want to get into arguments about whether this audience is significant, whether it is growing or declining – it is there.

This is an Xbox issue. Xbox has never been much of a place to play “games from Japan”. Some third parties are engaged with Xbox while others are not. It’s true that Sony “cash caps” things like Final Fantasy to keep them around turned off Xbox, but still, Xbox is missing out on countless Japanese titles. Smaller publishers, such as Nippon Ichi, simply skip the platform because it’s not worth running. The only way to turn this around is to build an audience within your install base for those publishers to sell to – and that’s where first-party production comes in. I’d say one point of a first-party product is to set an example – and the original example set for Xbox was a small production from Japan.

In the 360 ​​generation, this changed: the company made a series of exclusive deals for games such as Square Enix’s Star Ocean 4 and Capcom’s Infinite Undiscovery or Dead Rising.

It also funded first-party development of games like Lost Odyssey and Blue Dragon by Final Fantasy creator Hironobu Sakaguchi, or generally forgotten but really enjoyable B-listers like the Musou knock-off Ninety-nine nights and the FromSoftware slasher Ninja Blade. For two entries, Xbox was also the exclusive home of Dead or Alive, and it got ahead of the fighting game character curve with the inclusion of one of Halo’s Spartans in the fourth game. Beyond that, the Xbox’s relatively lax approval process and PC-like development environment meant that even in Japan it enjoyed the odd exclusivity, becoming the defacto home for things like the perverse simulator Gal Gun.

Then… well, who knows what happened? Put bluntly, things are simple changed. A lot. After a huge influx, Xbox simply stopped publishing games from Japanese studios. By the time we got to the Xbox One, Microsoft could only count a handful of Japanese exclusives, or even titles that were primarily Xbox-related thanks to marketing deals and the like. The most famous, Dead Rising, was a Japanese IP from a Japanese publisher developed in Canada. This perhaps speaks to the extent of the company’s commitment to Japan.

Japan thus became one of the elements of Microsoft’s 2020 acquisition of Bethesda that everyone – even those who warn against corporate consolidation – could at least partially celebrate. The purchase includes Tango Gameworks, an impressive Japan-based developer founded by Resident Evil creator Shinji Mikami. This gave Xbox something it never had: an established triple-A in-house developer in Japan.

Xbox had released big-budget Japanese games before, but they were almost always deals with major publishers or independent developers. Xbox Game Studios Japan developed cult hit Phantom Dust, then shut down. But Tango gave Xbox a real foothold for development in Japan, with one of the country’s most respected creators at the helm.

“I’ve talked for a long time about our desire to have more of a first-party presence in Japan,” said Phil Spencer in a retrospective official interview to celebrate the closing of the Bethesda deal. “[Acquiring Tango] is a great step there. Thinking about the map of where these teams are and talking about all the games they’re working on… I can’t wait to talk to the Tango team and get to know them.”

Not four years later, here we are: Tango Gameworks has closed. It’s a gut punch.

It is painful for several reasons. Let’s just say for a start that it’s complete bullshit that this studio is shut down after shipping a game that last year the Xbox couldn’t stop maintaining its success. It was the first Microsoft release in years to enter the Game of the Year discussion in a real way.

“Hi-Fi Rush was a smash hit for us and our players across all key metrics and expectations,” Xbox marketing executive Aaron Greenberg happily tweeted in April of last year. In interviews with Japanese outlets, Spencer used the Hi-Fi rush as an example of Xbox releasing Japanese-made hits, promising more to come.

Hitting all the key metrics isn’t good enough, it seems — even with the yen at its weakest point against the dollar in more than a decade, the studio must have been relatively cheap to run, too. All of these closures hurt, but this one was especially pointless.

More than anything, though, it’s an intuition because it sends a message. Wrong message, indeed. Xbox had one big studio in Japan – no more. Xbox is doing deals with third parties and independent creators, yes – there’s something in the pipes with Hideo Kojima, for example – but like I said, the first party is your north star. This is your best foot forward. The message becomes this: Japanese games are not a priority for us.

No amount of Spencer’s astonishment on stage at the Final Fantasy fanfest with Square Enix’s CEO changes that. No amount of co-marketing money thrown at Persona or Yakuza to get Xbox versions and Xbox logos in trailers can undo that message. Publishing a Kojima game can help a little – but not as much as having a favorite Japanese studio in your actual stable. After all, Kojima is just a gun for hire – whatever he does for Xbox will be compared to Death Stranding and his big new spy franchise at Sony.

And furthermore, if you were a Japanese publisher or developer being approached for acquisition, how would you rate the chances of your business surviving based on the evidence before you? Will government regulators believe that Microsoft will be a safe pair of hands for Japanese brands, big or small? In 2019, the year before the Bethesda deal, Xbox considered buying Square Enix, not for the first time in its history. How much of Square Enix would be left now if the company pursued this takeover?

That’s without getting into the optics of that closure, in contrast to footage of Xbox executives lamenting Lionhead’s closure in an official 2021 documentary. Lionhead. “You’re getting a studio for what they’re great at right now,” Spencer adds, which under the harsh light of 2024 generates an atmosphere more toxic than the FromSoftware swamp. “It’s your job to help them accelerate how they do what they do, not for them to accelerate what you do.”

Under Xbox Tango Gameworks did what it did well. It released a critical darling and a commercial winner, at least based on executive gloating on social media, which is pretty much the only indicator we have of Xbox publishing success in the Game Pass era. Their reward was the shutdown—and in less than half the time it took Xbox to shut down Lionhead.

It would be remiss not to point out in this article that Sony is not innocent in all of this. Microsoft’s main rival in the gaming space has made a number of brutal cuts this year, and they’ve also indulged in phasing out Japanese development. In 2021, Sony made the short-sighted decision to end the 30-year history of Japan Studio, the brand responsible for titles such as Gravity Rush, Ape Escape and Shadow of the Colossus.

Japan Studio delivered some of Sony’s most esoteric and creative cult hits – but didn’t deliver the cinematic Hollywood bombshell that could achieve eight-figure sales – so it had to go. It’s really an indictment of the state of gaming, where everything has to get bigger and bigger, with some of the stakes starting to feel completely untenable.

But when it comes to optics, Sony has one important feather in its cap: it’s Japanese. It is seen as the “natural” home of series Silent Hill, Final Fantasy, Monster Hunter, Kingdom Hearts, Resident Evil and Meal Gear Solid – even when these titles appear on other platforms as well. Sony’s shoddy decisions in the Japanese market are thus partly obscured by the storied history with the country and its developers; Xbox doesn’t have that luxury.

When you step back and reduce the events to their most reductive, the message becomes as subtle as a hammer: Xbox is not the place you want to be if you want Japanese games. At this stage, it would even be better on PC, an ecosystem that was completely ignored by the territory for a long time.

At a time when Xbox hardware sales continue to lag behind competitors everywhere, not just in Japan, this is a potentially dangerous thing indeed; there are millions who love this kind of games. Tango is just one studio that has developed only five games in its 14-year history. But Tango meant something: a powerful, well-supported, generously funded, and extremely talented Xbox development in Japan.

Now it means something else: the abandonment of the territory by Xbox. Xbox PR and bosses would counter this, eloquently claiming that they have a lot of unannounced development in Japan – third-party partnerships and even some primary publishing deals with non-own studios. I’m sure Persona 6 will come to Xbox on day one and maybe even have a marketing deal for Xbox in the West. That would be a huge win.

But like I said – the real, fully internal, fully owned first party is your first impression. This is where your brand perception begins. Perception is reality; and the death of Tango Gameworks is now the standard bearer of a particularly negative one. The Xbox management team has a mountain the size of Fuji to climb to dispel this.