As sales slump and its last great exclusive goes multiplatform, retailers confirm plans to phase out Microsoft's console.

The Xbox 360's life appears to be coming to an end in Japan, with hardware sales falling, retailers beginning to turn their back on the console, and the system's last high-profile Japanese exclusive headed to PlayStation 3.

In June, Microsoft announced that Japanese Xbox 360 sales had finally passed 1.5 million units since the system's release in 2005, but that should not be taken as a sign that its fortunes are improving. Media Create data for the year to date puts Xbox 360 hardware sales at just 72,721 units, a drop of 46.7 per cent on the same period last year. Sales of its rival, Sony's PlayStation 3, have also fallen year on year, but only by 17.1 per cent, to 735,637 units.

The slump in sales has, we understand, caused many Japanese videogame retailers to contemplate dropping the Xbox 360 altogether. Geo, the nation's largest specialist retailer, is drastically scaling back its Xbox 360 business, and staff at electronics retailer Yamada Denki in Ikebukuro, Tokyo, confirmed that the company is removing hardware and software from the majority of its stores nationwide, and is selling off its remaining stock at a heavy discount. It will still sell the console and games, but only in selected stores where the system continues to be sufficiently popular.

In Tokyo's smaller, specialist stores, Xbox 360 consoles and games are beginning to appear in bargain bins, or "wagon sales". Games can be had for as little as 100 (79p), with one store selling the Halo: Reach hardware bundle for 9,980 (79.30).

Perhaps the biggest indicator of the Xbox 360's struggles in Japan is the fate of The Idolmaster. Namco Bandai's pop-star management game, first released in arcades in 2005, was an Xbox 360 exclusive, its 2007 release reportedly causing a rush of new Xbox Live signups and a sharp increase in sales of Microsoft Points.

While PSP and DS releases followed, it was Microsoft's last high-profile console exclusive, and a sequel was released in February. It sold 34,621 copies in the week of its release, entering the Japanese all-formats chart at number ten, but the following week, it did not even make the top 40. The 2009 PSP release sold around 122,000 copies in its first week, and was in the top 40 for five weeks in total.

As such it was no surprise when, late last month, Namco Bandai announced that it would be porting Idolmaster 2 to PlayStation 3, with the Xbox 360 version's DLC included.

With mobile games increasingly popular in Japan - the sector's rise driven by mobile social networks like Gree and Mobage - cross-platform connectivity is becoming increasingly important as companies seek to protect their traditional sources of revenue.

Sony is becoming increasingly aware of this, with the upcoming Monster Hunter HD, the first game released for PS3 as part of the PSP Remaster series, allowing a single save file to be shared between PS3 and PSP. Microsoft, of course, has no portable console. With PSP still selling in huge numbers in Japan, and Vita set for release before the end of the year, it's little surprise that publisher eyes are drawn towards Sony: after all, cross-platform play means selling two games instead of one.

Kinect has done much to extend the 360's life in the west, sales of 8 million units in its first 60 days seeing it awarded a Guinness World Record, named the fastest-selling consumer electronics device of all time. In Japan, it was outsold on launch by PlayStation Move - no great surprise given PS3's far larger installed base - with one retailer saying shortly after launch that, far from helping sell the console to a wider audience, it was only being bought by existing Xbox 360 owners.

While the console's gradual disappearance from store shelves does not prevent gamers making their purchases online - indeed, it is our understanding that Amazon now handles a substantial proportion of Japanese Xbox 360 software sales - it does complicate things for Microsoft.

With an Xbox 360 successor widely accepted to be released in 2014, the firm may struggle to convince Japanese retailers to stock and prominently display the console when they have a decade's worth of proof that higher returns are available elsewhere.

Microsoft clearly still holds the Japanese market in high regard - just last month it appointed Takashi Sensui as head of the newly formed Interactive Entertainment Business (IEB), leaving him to focus almost exclusively on Xbox 360. While reports at the time implied a lighter load for Sensui - his previous remit also covered Windows and Office software - perhaps the reshuffle was in recognition of the onerous task he faces to revive the console's ailing fortunes.