Ex-PlayStation Boss Shawn Layden Tells Xbox to "Pick a Lane"

Shawn Layden, the former PlayStation boss, has offered strategic advice to Xbox leadership, suggesting the division needs to make a clearer choice about its direction under CEO Asha Sharma.

"Pick a lane," Layden said in an interview with The Expansion Pass. "Either you're going to be a platform competitive with PlayStation, or you sit back and realize you are the biggest game publisher in the world."

Layden outlined two potential paths. The first would require Xbox to compete directly as a console platform, which he acknowledged hasn't happened in years. This approach would demand decisions about exclusivity and ways to incentivize third-party developers to support the platform meaningfully.

The second option, which Layden emphasized as viable, would see Xbox transition entirely to software. He referenced Sega's decision to exit the hardware business and focus on games as a software publisher on other platforms. "This is your Dreamcast moment," Layden said. "When Sega decided, we're just going to be on PlayStation 2 and we're going to get out of the hardware business and just be a great software company. It can be done. It has been done before."

Xbox has undergone significant restructuring under Sharma's leadership, including mass layoffs, studio closures, and consolidation of developers under Activision, Blizzard, King, and Bethesda. These moves aim to make Xbox profitable while expanding its reach.

Xbox console sales have trailed PlayStation 5, which has sold 95.3 million units as of June 2026. Analysts predict only 2.5 million Xbox Series X|S units will sell in 2026, with expectations of a "rapid wind-down toward zero" before the next-generation console arrives.

A software-focused strategy could prove viable given the performance of Xbox first-party games on PC and PlayStation 5. However, such a shift would come with tradeoffs. Releasing games on competing platforms means sharing revenue, whereas keeping games exclusive to Xbox platforms allows Microsoft to retain 100% of sales through its storefronts.