The current strategy is Xbox Continuing to trigger industry discussions, according to Shawn Layden, former president of sony Interactive Entertainment Global Studio, Microsoft The direction of its gaming division should be more clearly defined. In an interview with The Expansion Pass, Layden gave his advice directly to Xbox CEO Asha Sharma: “You have to choose a direction.”
Focus on hardware or software
According to Redden, Microsoft basically has two options. First is to return to Focus on cross-platform competitiontrying to get the Xbox to compete with the PlayStation again. In this case, the company should also make precise decisions about the role of exclusive games and find new ways to incentivize third-party developers and publishers to support its platform.
“Either you choose to be a platform that competes with PlayStation, even though Xbox hasn’t quit gaming and can try again, which it hasn’t done in years, or you stop and realize that you are the largest video game publisher in the world,” Layden explained. He added, Microsoft, thanks Activision, Blizzard, Bethesda and other acquired studios, has a catalog that allows it to focus on software.
Half-Life Dreamcast, decompiling the canceled version and restarting online multiplayer
It’s this second possibility that the former Sony executive compared to Sega’s subsequent transformation. Dreamcast commercial failureits latest console. “This is your Dreamcast moment,” Leyden said. This refers to Sega’s decision to abandon the hardware market due to difficulties and focus on the development and distribution of video games for other platforms.
“When Sega decided:”We’ll focus on PlayStation 2“We will exit the hardware business and become a large software company.” This is a feasible path. It’s been done before. That’s my advice: pick a direction,” Leyden added, seeming to think it was the best direction.
The comparison comes amid profound changes for Xbox. Microsoft is reorganizing its gaming division, and Xbox Series X and S sales remain difficult to officially quantify because the company does not regularly release sales figures. Standard & Poor’s forecasts released this summer showed that Xbox series sales are expected to reach 2.5 million units. However, the same analysis highlights that future prospects depend on decisions that still need to be made about the next generation of Xbox.
At the same time, Microsoft will continue to launch An increasing proportion of games are on PC and PlayStationwhile reorganizing the studio to focus more on franchises with greater commercial power. Financial performance also shows a variety of situations: In the fourth quarter of fiscal 2026, Microsoft reported a 10% decline in Xbox revenue and a 10% decrease in content and services. At the same time, it had predicted that hardware revenue would shrink further.
However, the choice between hardware and software is not without consequences, both financially and imaging-wise. Therefore, selling first-party games on Xbox through its own ecosystem allows Microsoft to retain largest share of revenue Publishing on PlayStation and Steam expands the potential audience compared to publishing on competing platforms, but comes with associated commissions. In short, the choice isn’t easy, and as Redden said, Xbox has very strong intellectual property rights.
