Yesterday was a bad day for game localisation and censorship, and especially so from Microsoft's point of view. Not only did the company have to announce that Fallout 3 would not be coming to India but also that Gears of War 2 would not be making it to German store shelves either.

In the case of Fallout 3, Microsoft India announced that “in light of cultural sensitivities” the company made a “decision to not bring Fallout 3 into the country.” This of course comes in the wake of prior controversy surrounding the game’s content in Australia which culminated with Bethesda producing a sanitised version of the title for release in the region. With regards to GoW2, the game was refused classification by Germany’s regulating body in May of this year, effectively blocking the possibility of any official release of the title.

With these announcements coming so close to both games’ prospective release dates they can be nothing short of huge blows to Microsoft’s plans for the latter part of 2008. Considering the huge efforts the company is making to expand the Xbox 360’s reach the cancellation of these two titles (both central to the company's seasonal portfolio) in their respective regions will come as a great strategic loss to the company.

As game budgets are pushed higher companies will have a greater reliance on the international scope of titles for revenue, especially so in the emergent powers (and potentially massive consumer markets) of India and China. In lieu of this, the question posed to publishers - and by default developers - is can they risk a cultural backlash when so much of their business is relying on these diverse and potentially sensitive markets?

Since late last week, Sony has been learning the hard way just how profound an effect cultural sensitivity can have on its business and prospects. The counter argument to this is of course that developers should never compromise on quality and never ever bow to the threat of censorship as a form of coercion. Doing so could lead to loss of credibility and sales in those territories without especially strict or specific levels of classification.

That said, where does the buck stop? How willing will publishers be to finance titles that could potentially never see release in certain critical territories? Finally, as with Fallout 3 in Australia, to what extent can localisation account for minor discrepancies between regions? While these are not new questions, they are more pressing than ever. As the industrialised world slips into recession firms with international scope will be looking to make the most of all national markets. As such, they cannot allow such crucial titles to fall at that most trivial and subjective of hurdles that is censorship.