Shawn Layden: Video Game Industry is Ripe for Disruption, Consolidation is Enemy of Diversity - NewsWilliam D'Angelo , posted on 01 August 2021 / 12,869 Views
Former chairman of Sony Interactive Entertainment Worldwide Studios Shawn Layden in an interview with GamesIndustry discussed the future of the video games industry.
Layden says the cost of video games keeps on rising with it doubling every generation and that is not sustainable as the console business has been stuck around 240 to 260 million people since the late 1990's.
"We're just getting people in the gaming world to spend more money," Layden said. "With each console generation, the cost of games goes up 2x. So PS4 games were $100 to $150m, so it stands to reason that PS5 games -- when they hit their stride -- will be in excess of $200m. It's going to be very difficult for more than a handful of large players to compete in that space.
"During that time we have also seen more consolidation. Consolidation is the enemy of diversity in some ways. It takes a lot of playing pieces off the table as they grow into these larger conglomerates. And again, we end up with this problem with diversity.
"Music on a revenue basis is probably one fifth of the games space. But their cultural impact is 100x what gaming is. Right now, we are narrowing ourselves down into genres and sequels and certain types of games. Favourites like my own, like Parappa and Vib-Ribbon, those things don't seem to get a chance to come out on stage. That's bad for the industry and for fans. Over time, that leads to a crumbling of the games industry if we just keep talking to the same people and telling the same stories in the same way.
"I was interested in Streamline because it has spent almost the entire of its 20 years with a remote distributed development model. They speak 27 different languages throughout their studios and have people from 47 different countries. It is an incredibly multi-cultural workforce, and that is where the future of breaking gaming into a wider audience beyond the 240 to 260 million."
Layden added the industry is ready for disruption and some of the leaders in the industry better get on with that.
"Of course, if you add in mobile phones you get to hundreds of millions of players," he said. "But those are related but distinct categories. We've learned over time that mobile gaming isn't necessarily a gateway into console, but just a different thing for people to do at a different time of the day.
"So this industry is ripe for disruption, and some of us better get on that."
Indirectly he talked about Xbox Game Pass and how tough it would be to make it sustainable with the cost of the biggest games now north of $100 million and the number of subscribers it would take to make it profitable.
"People don't buy consoles because they want more steel and plastic in the living room," Layden said. "People buy consoles because they want access to the content. If you can find a way to get the content into people's homes without a box, then yes, indeed. Everyone has a streaming solution of some form. Most of it is limited by whether you have a decent internet connection. And they haven't constructed the business model that works yet for that.
"It's very hard to launch a $120m game on a subscription service charging $9.99 a month. You pencil it out, you're going to have to have 500 million subscribers before you start to recoup your investment. That's why right now you need to take a loss-leading position to try to grow that base. But still, if you have only 250 million consoles out there, you're not going to get to half a billion subscribers. So how do you circle that square? Nobody has figured that out yet."
He concluded by saying that gaming is reaching the end of its second epoch, which was the last 25 to 30 years of console gaming.
"Gaming is reaching the end of its second epoch, which was the last 25 to 30 years of consoles everywhere," Layden added.
"What is that third epoch? Who is going to make the definitions around that? Who is going to lead this thing? Our industry as a whole has to get in front of that. I'm sure there are concerns about who sold more boxes last week and all that, and companies need to look at that because they're businesses. But those of us who can chart the course for that third epoch, I think that's an exciting thing to be part of.
"But going forward, you're going to see a lot of stuff coming out of Streamline in the games space, but also in this enterprise space. It's also looking at ways of how we can help on-ramp new creatives and people who think that gaming is not for them. Or wish to be here but can't be here. We need to open up those opportunities. It is super important."
A life-long and avid gamer, William D'Angelo was first introduced to VGChartz in 2007. After years of supporting the site, he was brought on in 2010 as a junior analyst, working his way up to lead analyst in 2012. He has expanded his involvement in the gaming community by producing content on his own YouTube channel and Twitch channel dedicated to gaming Let's Plays and tutorials. You can contact the author at email@example.com or on Twitter @TrunksWD.