Xbox 360 Being Phased Out of Japanese Shops – Xbox360 News at IGN.

I actually have a beef with this notion of “system sellers,” and it’s connected to a larger beef regarding the old-world values most gamers still cling to. Old-world here meaning “10 years ago.”

The marketplace for games has changed drastically. Ten years ago, failure in Japan meant that a console was not successful. “Western” games were overwhelmingly made for the PC crowd.

But the market has changed. PC gaming is on a road to abandoning pay-to-play models and brick and mortar distribution (as brick-and-mortar has abandoned them), and have even set up their own platforms and storefronts. We used to maintain that “system sellers” were titles that existed exclusively on one platform to the exclusion of others. Then we came up with this concept of the value of a “timed exclusive,” which is to say a title that was only available on one platform for a given period of time (Splinter Cell, for example), and I think the reality is that Microsoft, marketing and strategy-wise, has moved beyond that.

This is the digital age. If you want to look at exclusives, look at the digital exclusives, because that’s where Microsoft makes all their money, and where they continue to excel in the console space. People don’t talk about PSN’s competition with Xbox Live titles. They talk about Steam’s (PC) competition with Xbox Live content and titles. They talk about iTune’s competition with Zune marketplace (Well, they would if iTunes didn’t kill it every time, all the time).

The way and extent to which we consume media has changed to a digital format.

Comparatively speaking, I’d be willing to bet that a given title might sell more on the PS3, but will make more money on the 360. To access that higher revenue stream, Microsoft has positioned itself to ask for concessions from the biggest names in publishing – Activision-Blizzard, EA, Ubisoft, everybody shows Xbox DLC the love first and foremost. And the direct benefactor of that is, unsurprisingly, Microsoft. The indirect benefactor are Xbox 360 owners. That’s what the XBL advocates are talking about when they talk about the ‘superior’ nature of the service. They’re discussing the fact that, industry-wide, the most-agreed-upon standard for an online experience on a console is the Xbox 360. Yes, it’s not open, so that’s frustrating. Yes, it’s hard to update and certification is a pain in the ass. But people do it because of all that delicious, delicious money.

What relationship does all this have with Japan? A number of things, actually. Japanese consumers apparently DON’T consume that way, or at least they don’t do it yet. In 2010, digital music sales (just as one media example) in Japan fell 6%, whereas projections from 2010 of digital music sales in the US declared that they would overtake physical media by the close of 2011 (note: it already happened).

If you want proof that all media is going digital, look at Amazon Video. Look at Borders closing. The writing is on the wall. The money to be made is made digitally. After that realization, why would you continue to throw tons of cash behind the Japanese implementation the 360 when all it’s ever going to do is lose you money? They’re not buying your Arcade games, they’re not making indie games for you to make money off of, they’re not doing anything that benefits Microsoft’s business model. This new guy’s job will be to try and fold the Japanese business into the digital era.

It’s a mindset I cannot understand. Failure in Japan is almost (almost. ALMOST. I want to specify that ALMOST as hard as I can) proof of Microsoft’s success in converting their platform to more than a piece of hardware. It’s now a storefront and a revenue stream as well as a gaming console, and it seeks to compete in that vein by far and away more aggressively than it seeks to compete for us.

Yeah, I said it. Accept your irrelevance, core gamers. We are obsolescence defined. Microsoft’s game division is only gonna get more profitable as they continue those shenanigans, and we will continue to feel left out and left behind by them, talking about how screwed they are. They’re not screwed. We’re screwed. Because they’re proving to the other Big Two more and more – and this is important – that there is one simple truth:

They don’t need us anymore than they need Japan.