xbox is seeing growth in Japan, with cross-platform player engagement increasing significantly across the gaming ecosystem throughout 2025. With Japan being one of the world's largest video game markets, this newly reported momentum provides an encouraging sign for Microsoft in contrast to the recent challenges faced by Xbox.
Despite starting out similarly, Xbox Series X/S sales have started to lag behind the Xbox One in recent years. For the fourth quarter of FY25, ending June 2025, Microsoft reported a 22% year-over-year decline in hardware sales. Meanwhile, Xbox Game Pass growth has been slowing for years, with Microsoft stopping providing regular updates on subscriber numbers. Amid these challenges and the industry-wide trend toward longer and more expensive development cycles, Microsoft has recently turned to third-party publishing in an effort to increase gaming revenue, bringing some of its biggest franchises to competing platforms.
Xbox is growing in Japan, says Phil Spencer.
In contrast to these challenges, Xbox performed somewhat better in Japan. These are the words of Microsoft Gaming CEO Phil Spencer, who shared as much in a recent interview with Famitsu. The executive said total play time has increased about 20% “over the last year,” and clarified that this figure includes users of Xbox consoles, PC games played through Microsoft platforms, and Xbox Cloud Gaming. When asked for a more detailed analysis, Spencer said the three platforms grew mostly evenly. He explained that the distribution of growth is consistent with Microsoft's strategy of wanting people to play on Xbox regardless of their device of choice.
Japan-based games could further boost Xbox numbers in that country.
Looking back on its current performance, Spencer said Xbox has much more room to grow in the Far East. “If we provide content to Japanese players, [engagement] “It will grow further,” he said. This strategy appears to already be in place, as highlighted by the recent announcement of the Japanese set. Forza Horizon 6 At the 2025 Tokyo Game Show.
Why Japan Is Attractive to Xbox (and Other Gaming Platforms)
Xbox has historically had a modest presence in Japan, but the country represents a significant opportunity for all platform holders. A recent Newzoo study ranked Japan as the world's third-largest gaming market in terms of revenue ($16.8 billion), behind the United States ($49.6 billion) and China ($49.8 billion). Although these figures include mobile games, which make up a small portion of Microsoft's gaming business, Japan is one of the top markets for console and PC gaming, with 29.7 million console players and 14.4 million PC gamers, according to the CESA Gaming Industry Report 2024.
Another promising sign from Xbox Business: Revenue Growth
Time will tell whether Microsoft's push to offer more Japanese-themed game content in the form of DLC and full-fledged games ends up being a shorter-term trend or a sustainable long-term strategy. Another open question is whether increased play time in Japan will translate into sustained revenue growth. According to Microsoft's latest proxy statement filed with the SEC, its Xbox division reported annual revenue growth of 16% (or 15% when accounting for currency fluctuations), hitting key performance targets for the first time since 2020.
Source: Newzoo, Automaton West, Microsoft/SEC
