Xbox Strategy Advice
Former PlayStation boss Shawn Layden has offered new Xbox CEO some words of advice as she resets Microsoft’s gaming business: “pick a lane.”
In an interview with The Expansion Pass, the former boss of Sony Interactive Entertainment America called the decision Asha Sharma now faces Xbox’s “Dreamcast moment.”
This is a reference to Sega’s exit from the console business following the commercial failure of the Dreamcast. That call, made in early 2001, ended a run of console manufacturing that included the Sega Genesis, Game Gear, and Sega Saturn. Sega instead focused on releasing video games on rival consoles, such as Sony's PS2.
Restructuring and Next-Gen Plans
Xbox is in the middle of a restructure that has seen staff reductions, studio closures, and game cancellations. Xbox is focused on major franchises like The Elder Scrolls, Fallout, and Minecraft, while managing hardware questions surrounding next-gen console plans.
With this in mind, Layden was asked if he had any advice for Sharma. He presented two options: compete directly with PlayStation on hardware, or exit the console market and focus purely on software.
“You got to pick a lane,” he began. “Either you're going to be a platform competitive with PlayStation — which Xbox has not been competitive with PlayStation for years — but that's not out of the window. You know, you can still make another run at it. And there are certain decisions you have to make around that about the platform. We talked about exclusivity. We talked about, how do you incentivize third-parties to support your platform in a meaningful way? This is all things around the platform business.
“Or you sit back and realize you are the biggest game publisher in the world. Well maybe Tencent’s bigger, but in the Western world you are the biggest game publisher out there with Activision and Blizzard and Bethesda and all the other pieces. Be that. This is your Dreamcast moment, when Sega decided we're just going to be on PS2 and we're going to get out of the hardware business and just be a great software company. It can be done. It's been done before. So, that's my advice. Pick a lane.”
Hardware Market Pressures
Microsoft has faced ongoing questions regarding its hardware future amid sales figures for the Xbox Series X and S. Publicly, leadership has maintained a commitment to console hardware, acknowledging that the company needs to evaluate how consoles operate and generate revenue amid rising component costs.
Sharma noted that increasing hardware and component costs would require different business models for upcoming generations, pointing out the financial challenges for mass audiences to afford new systems.
Former PlayStation executive Shuhei Yoshida also commented on the industry-wide pressure of rising costs, noting that platform holders need to maximize the lifecycle of current hardware.
Questions remain regarding upcoming hardware iterations, future exclusivity strategies, and Xbox's long-term commitment to the console market.
Photographer: Patrick T. Fallon/Bloomberg via Getty Images.
