Few people know more about helping run a successful console business than Shawn Layden. He was there at Sony when the PlayStation dream was first dreamt, and over the course of three decades he helped realise it and shape it. He was there for PlayStation 1, 2, 3, and 4. He helped lead the Japanese side of the business, the American side of the business, the European side of the business. By the time he left in 2019, Layden was overseeing the company’s 13-strong roster of first-party studios. He knew the console business inside out.
It’s why, when he took an apparent potshot at Microsoft’s running of Xbox on Linkedin recently, people noticed. Layden wrote (in a comment since deleted): “At the risk of sounding like a ‘hater’ (which I’m really not), the moves evince a basic misunderstanding of how the interactive entertainment world moves. IYKYK, which also means if you don’t you don’t.”
This remark made me contact Layden because I wanted to understand better what he meant. But I also wanted to know what he thought about Asha Sharma’s time in charge of Xbox, having held a similar position himself. We talk in the days leading up to the devastating Xbox cuts; they weren’t fully visible at that point. But the points Layden makes still resonate.
Microsoft has to make a choice, Layden tells me. The Xbox business either has to focus on becoming the biggest game publisher in the world – which with Activision Blizzard and Bethesda on its books, it is very close to being – or it has to focus on being a platform holder like a more traditional console business. But importantly, it can’t be both. “There’s two roads,” Layden explains. “To be a competitive platform rival in the marketplace with PlayStation, or the biggest game publisher in the world, which based on all their acquisitions, they’re either there or they’re very close to it.
“But those two roads do not converge. Those two roads necessarily diverge, because to be a platform and to be a very well-supported, well-accepted, well-selling platform, you need exclusive content. Nintendo needs its Mario and its Zelda, and PlayStation needs Crash Bandicoot and Astro Bot, and Kratos and Horizon, all of that. But if you’re going to be the biggest publisher in the world, which is not a bad ambition – I’m sure there’s gold on them there hills – you have to bring your stuff on every platform. Multi-platform is almost a prerequisite.”
“To be a platform and to be a very well-supported, well-accepted, well-selling platform, you need exclusive content” -Shawn Layden
He adds: “When I was running PlayStation Studios, even in our biggest year, we never got over maybe 22 percent market share. Easily 80 percent of the business was being delivered by Electronic Arts, Ubisoft, Activision, Take-Two, Bandai Namco, Sega. That’s their opportunity. As a first-party platform, our job was almost not to be the biggest game publisher in the world. In fact, it was against our interest to start muscling our partners out of the pie. We weren’t there to steal; I wasn’t making games so I could steal market share from EA or steal market share from Activision. My job was to make games that made the pie bigger, and my opportunity was in growing it out.”
Microsoft’s Xbox business used to work in a similar way, revolving around a few core studios making Halo, Gears of War, Forza and Sea of Thieves (though the teams that created Halo and Gears of War – Bungie and Epic Games, respectively – moved onto making other things). There was the lavish purchase of Minecraft maker Mojang in 2014 for $2.5bn, but for a while, that seemed to be it. However, that changed in 2018 when then-Xbox boss Phil Spencer led a spending spree to acquire several studios and bolster Xbox’s roster in increasingly unprecedented ways.
In the summer of 2018, Microsoft announced the acquisitions of Forza Horizon developer Playground Games (currently making Fable), Hellblade developer Ninja Theory, State of Decay developer Undead Labs, and We Happy Few developer Compulsion Games (which would go on to make South of Midnight). Then in the autumn, Microsoft announced two more acquisitions: of role-playing specialists Obsidian Entertainment and inXile Games. But it didn’t stop there. The buying continued with the addition of beloved indie developer Double Fine in summer the following year, and that, it turned out, was only the start of it.
Layden was still at Sony when these acquisitions were happening, and his initial reaction to it was simple: “Wow, that’s crazy.” To him, acquisitions took time – that was the Sony way. “If you look at the history of PlayStation’s acquisitions in the game studio arena pre-2020, you’ll see that – whether it was under my leadership, or Shuhei Yoshida, or Kelly Flock, or even Phil Harrison – we tended to acquire studios that we had already worked with before. Studios which we had typically done an external development deal [with],” he says.
“We found by doing those kinds of deals – Crash Bandicoot was an external development deal, Spyro the Dragon was an external deal, even the first Killzone was an external development deal – you get to learn that studio. That studio gets to learn who you are, and from there you begin to build the trust. And I know it’s an overused word in business today and when you use it too often, people forget what it means, but trust is so elemental to running any business, certainly in the entertainment field. Because so much is unmeasurable, so much is not empirical, it’s ‘oh what a feeling’. It’s, ‘We have a game here? I feel we’ve got a game here. I know these people, I know what they’re saying.’ You have a shorthand in how you discuss things; you know where you’re going because you’ve worked with them long enough.”
“So when Microsoft went on their buying spree in 2018, I was impressed, I guess” -Shawn Layden
That’s why it took Sony 20 years to buy Ratchet & Clank developer Insomniac, he says; a studio that would make modern PlayStation’s best-selling Marvel’s Spider-Man series and is currently working on Marvel’s Wolverine, out this September. “People would say, ‘Ah you should have bought them years ago’. Probably, but they were on a journey and Ted [Price, former CEO of Insomniac] wanted to do some stuff with EA and do some stuff with Microsoft and be an independent studio, and then we came back together. And on the eve of Spider-Man, it was like: we should just put a ring on it – we’ve been dating for 20 years.
“So when Microsoft went on their buying spree in 2018,” Layden continues, “I was impressed, I guess. It’s like, ‘Wow you can buy up all these teams you haven’t worked with before and own them, and now you’re going to make sweet music together?’ That’s great, if you can do it.”
But there’s a danger here, obviously. If 2018 was the start of Microsoft’s spending spree, it hit astronomical new heights in 2020 when the company announced a stunning decision to buy ZeniMax Media, the parent company of publisher Bethesda, for $7.5bn. That brought a roster of studios including id Software, Arkane Studios, MachineGames, Tango Gameworks and of course Bethesda Game Studios into its fold. Then in 2022, Microsoft announced the big one: the $68.7bn acquisition of one of the world’s largest publishers, Activision Blizzard. This gave it control of enormous game franchises with enormous development footprints, from Call of Duty to World of Warcraft, and a studio portfolio that counted some 10,000 people working across it. It was a deal so large it took nearly two years to be cleared at government regulatory levels because of monopoly fears.
Partly to satisfy those regulators, Microsoft found itself necessarily walking both roads Layden outlined above: being a third-party publisher and a platform holder. The big play was Game Pass, of course: to create a subscription service that would have a catalogue so broad and consistently varied that people would attach to the service and never let go. But as Xbox Series S/X sales slowed, its limited install base became a problem, leaving Microsoft in search of another solution. And in 2024, we got it. Xbox was going multiplatform, both in the sense it would publish games – including former Xbox exclusives – on PlayStation and Switch, and in the sense of widening what Xbox is. “Every screen is an Xbox,” Microsoft told employees at the time, and Game Pass was to spread across all of them.
Fast-forward and that whole wobbly castle starts to break apart. GameSpot has put together a timeline of all the Microsoft Xbox layoffs since 2024, which charts many thousands of job losses, many studio closures, and many game cancellations – all as Microsoft struggled to control the mass it had accrued. Add to that geopolitical factors such as extraordinary tariffs, skyrocketing costs of living, and stratospheric hardware component costs – driven by an insatiable hunger for gen-AI dominance that Microsoft itself exhibits – and you start to grasp the state of the business Asha Sharma inherited. Tellingly, she wrote in her “resetting Xbox” letter that: “We now find ourselves competing not only with the largest publishers, but also with smaller independent studios,” which underlines Layden’s road-walking analogy again.
“I don’t know what jobs she’s been given so I don’t know how she’s executing against her remit,” Layden tells me. “Like I said, I’m not a hater. In fact, I prefer the industry when you have two really strong competitors. You get better games, you get more games, frankly, and you get an industry that is riding a positive wave.
“Back in the 70s when heavyweight boxing was still a thing, it was the years of a guy named Muhammad Ali and a guy named Joe Frazier who had this series of battles, and they were battling it out all the time. Everybody knew what was going on; everyone knew. Everyone was either Team Frazier or Team Ali, and that created a greater halo for the entire sport.
“Back when there was 360 and PS3: those were the halcyon days, man, throwing punches back and forth” -Shawn Layden
“Back when there was 360 and PS3: those were the halcyon days, man, throwing punches back and forth – you know, who’s winning? I’m not so much into the format wars, or game wars or whatever you want to call it, but that energy just created excitement. People outside of gaming saw it happening and watched it happening, and it also encouraged both sides: ‘We need a game to answer that, we need to go against this, we need to have this and that other thing.'”
Coincidentally, Layden’s comments echo what his then Xbox 360 rival, Peter Moore, said while talking to me last year. Moore explained the sense of competition between PlayStation and Microsoft not only excited gamers, “It also drove all of us in the battlefield of console wars for market share to do better, because we needed to.”
From the outside, that sense of competition has waned since Xbox started working with PlayStation as a multiplatform publisher. It’s a sense of competition Asha Sharma has talked about getting back, harkening back to the Xbox 360 spirit, as Xbox exclusives become a thing again. But the proposition remains confused.
Which brings us back to Layden’s spicy LinkedIn comment, which he says came from a conversation with a colleague about understanding “entertainment DNA”, and “why I believe companies like Netflix, Amazon, Google, Apple, have struggled in creating interactive entertainment”. As he puts it, “They’ve all rushed in with the idea that they have top-drawer technology and an endless wallet, ergo we can be huge players in the gaming industry, and that doesn’t work.”
We saw it happen in the early 2000s, he says, when Fox and MGM and Universal and CVS – all these major entertainment players – thought it would be as simple as hiring a team to adapt franchises into games and “we all go laughing to the bank”. But “just having the IP isn’t enough to solve this equation,” he says, “and just having the technology and money isn’t enough to solve this equation. It’s really the confluence or the integration of those two halves.”
“I don’t want to sound like a Sony fanboy but after 32 years, forgive me,” he adds, laughing. “I don’t know what else to say! But one of the things I think was so key to the success of PlayStation was when they incorporated the company Sony Computer Entertainment in 1994 as a joint venture between Sony Electronics and the other half was from Sony Music.” And why? Because it merged a straight-laced side of the business with a more provocative one, and it needed both to flourish. The electronics team had the nous to make the hardware but the music team had the nous to get games for it and sell it. “Ken Kutaragi was smart enough to know that the electronics guys couldn’t do this; they wouldn’t know what a good game was or what kind of consumers do you talk to. And the music guys brought advertising to gaming that was unlike anything they saw before.”
His point is that there’s a balance a company needs to have. “If you forget [that], if you think you’re in the electronics business or the computer business, or the computer software business, or the technology business – if you forget that you’re essentially in the entertainment business, that’s where you stray.” Or to put it another way, “In the beginning there was the game and from that, all things spring.” Layden ends by returning to the LinkedIn phrase that kickstarted this whole conversation: “If you know, you know; and if you haven’t been infused with some kind of entertainment DNA, you’ll never know.”
So as the games industry surveys the devastation wrought by Xbox’s recent layoffs, the question arises once more: does Microsoft’s leadership know?
