The Japanese arm of Microsoft's Xbox division is to see personnel reductions across the board, as the console continues to struggle in the Far East - but the company denies any scaling back of the Xbox operation itself in the territory.

The headcount of the 200-person strong division will be cut by 34, with reductions affecting personnel in both marketing and production. The company claims that these changes are being made to improve the profitability of the business.

To date, Tecmo's Dead or Alive and Dead or Alive Xtreme Beach Volleyball titles remain the only real success stories on the Xbox in Japan. The console has not yet reached 400,000 units sold in the territory, according to figures quoted by the Nihon Keizai Shimbun newspaper today.

Although Microsoft strongly denies that it is terminating or scaling back its Xbox operations in the Far East, this is almost certainly how the story will be interpreted by analysts - with the scaling back of the unsuccessful division being seen as a tacit admission that Xbox is dead in the water in Japan. © gamesindustry.biz