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Former Xbox executive Ed Fries has suggested that many a Japanese game publisher wanted to support Microsoft's first console, but feared "Sony could punish them" if they did too much.
Ed Fries was the console manufacturer's vice president of game publishing during much of the original Xbox's life, and had a huge hand in the acquisition of studios such as Bungie (Halo), Rare (Banjo-Kazooie), and exclusives from outside developers.
"Some of them we were able to do deals with, some of them we weren't," Fries recalled. "They [Xbox] were able to do some deals after I left with Square, but it was always like, a tough discussion because they wanted Sony to have competition, but they couldn't be too overt for their support of Xbox. They couldn't make it too obvious they were supporting Xbox."
Fries went on to say that it wasn't a sentiment exclusive to Square - other Japanese publishers felt the same way, pointing to how Tecmo released Dead of Alive 3 and Dead or Alive 4 exclusively on Xbox consoles: "They did it kind of to tweak Sony because they wanted Sony to have competitors because otherwise they're a monopoly, and monopolies, you know, just do whatever they want."
What was there to be afraid of? Well, Fries suggested PlayStation and "Sony could punish them if they wanted to" by, say, not sending publishers development kits at the same time as their competitors or simply not promoting their games. Still, the threat of a monopoly meant Sony might've been unfair to gamers and developers regardless.
Xbox went on to make some pretty hefty deals with big-name Japanese developers and publishers eventually, even securing a couple exclusives from Square Enix itself, such as Infinite Undiscovery and The Last Remnant, and finally getting its premier franchise on the machine with Final Fantasy 11 and Final Fantasy 13 - the latter of which is still backwards compatible on Xbox Series X|S, by the way.
