More than anything, though, it’s a gut punch because it sends a message. The wrong message, really. Xbox had one major studio in Japan - no more. Xbox is making deals with third parties and independent creators, yes - it’s got something in the pipes with Hideo Kojima, for instance - but like I said, the first party is your north star. It’s your best foot forward. The message becomes this: Japanese games are not a priority for us.
No amount of Spencer pow-wowing on the Final Fantasy fanfest stage with the Square Enix CEOchanges that. No amount of co-marketing money thrown at Persona or Yakuza to get Xbox versions and Xbox logos on the trailers can undo that message. Publishing a Kojima game might help a bit - but not as much as having a beloved Japanese studio in your actual stable. In the end, Kojima is just a gun for hire - whatever he makes for Xbox will be compared to Death Strandingand his big new spy franchise at Sony.
And furthermore, if you were a Japanese publisher or developer approached for acquisition, how would you rate the odds of survival for your business based on the evidence before you? Would government regulators trust that Microsoft would be a safe pair of hands for Japanese brands, big or small? In 2019, the year before the Bethesda deal, Xbox mulled over a purchase of Square Enix, not for the first time in its history. How much of Square Enix would remain now had the company pursued that takeover?
It’s funny especially because the attachment rate of the average gamer to a console is like less than 4 games. Microsoft killed their cash cow when they mismanaged Halo into oblivion. Players came to Xbox for Halo not the other way around. Once they had that audience they invested into them with more titles (like halo 3 and gears of war) and improved online experiences, by the time the 360 was done, Microsoft’s new direction for the console including the announcement (then retraction) of CD keys being their new killer feature, they lost the entire audience at the turn of the hardware generation. Players ended up mostly on PC at that point.