Former PlayStation boss Shawn Layden has offered advice to Xbox leadership, urging them to define a clearer strategic direction. Layden, speaking in an interview with The Expansion Pass, suggested that Xbox should "pick a lane," referencing the company's recent shifts under CEO Asha Sharma, which have included layoffs, studio consolidation, and a focus on integrating entities like Activision, Blizzard, and Bethesda.
Layden presented two potential paths for Xbox. One is to recommit to competing directly with PlayStation as a console platform. He acknowledged that this has not been Xbox's strong suit in recent years but suggested it's still a possibility, requiring strategic decisions regarding platform exclusivity and third-party developer support. The alternative, he proposed, is for Xbox to fully embrace its position as potentially the world's largest game publisher, especially within the Western market, given its ownership of major studios.
He drew a parallel to Sega's "Dreamcast moment," when the company shifted its focus from hardware to software after its console efforts proved unsustainable. Layden suggested this could be a viable path for Xbox, allowing it to concentrate on its publishing strengths.
Xbox's hardware sales figures have historically been a closely guarded secret, with reports indicating that it lags significantly behind Sony's PlayStation 5. Analyst predictions for Xbox Series X|S sales in 2026 suggest a steep decline, potentially indicating a strategic shift away from hardware ahead of the next-generation console cycle.
While shifting to a software-only model could leverage the success of its first-party titles on PC and other platforms, such as Fallout and Forza Horizon, it also presents financial considerations. Releasing games on competing platforms like PlayStation and Steam means sharing revenue, whereas first-party sales through Xbox's own storefronts retain 100% of the revenue. Microsoft also generates income from licensing fees charged to third-party developers, adding further complexity to the decision between hardware and software focus.