[JiveTurkey]

That may be true but you are forgetting one of the major factors in marketing - the best product doesn't always win. The most popular product does.

The problem with Japan is that there is a much larger audience and wider age range of potential customers that cant be ignored.

The other major problem is that most game development happens in Japan not America. MS promised they would buy rights to all the best PC games and have a huge library (hmm Phantom anyone?) which they havent. They havent been very successful making their own games or buying rights to that many killer games either.