“Pick A Lane”: Former PlayStation Executive Compares Xbox’s Crisis to SEGA’s Historic Console Exit and Gives Asha Sharma Advice

Despite commemorating its 25th anniversary, 2026 has been a tumultuous year for the Xbox brand, marked by restructuring that has led to studio closures and hundreds of layoffs. But a former PlayStation executive recently weighed in on the challenges facing Asha Sharma’s leadership, noting that while her position is complex, there’s something she can do that will help her to forge XBOX’s identity.

Appearing on the latest episode of The Expansion Pass podcast, Shawn Layden, who served as CEO of Sony Interactive Entertainment America concurrently with industry leaders Reggie Fils-Aimé and Phil Spencer of Nintendo and XBOX respectively, analyzed the current trajectory of Microsoft’s gaming division.

Shawn Layden Compares XBOX to SEGA

Layden likened Xbox’s precarious standing to SEGA’s plight following the commercial failure of the Dreamcast in 2001. Lacking the deep financial reserves of its competitors, SEGA was ultimately forced to abandon hardware manufacturing entirely and pivot exclusively to software development and publishing.

“I think if you have a pile of Microsoft money maybe you don’t feel that squeeze until suddenly it’s hard to ignore,” Layden observed.

Microsoft’s console sales have lagged significantly behind those of Sony and Nintendo for years, prompting the company to stop disclosing hardware unit figures altogether. Combined with a multi-year strategy of diminishing console exclusivity, it leaves players with fewer reasons to invest in the brand as the industry looks toward Project Helix and the next generation.

“Microsoft never picked a lane,” he stated. “Or if they did, they didn’t stick with it over the long haul.”

Shawn Layden Gives Asha Sharma Advice to Help XBOX

The executive said that being a console without exclusives makes no sense, and if you want to be one of the biggest publishers, you need to be on every platform, but you cannot be successful on both. On the other hand, if Microsoft offers a subscription service (Xbox Game Pass), it negatively impacts game sales

When asked what advice he would offer Sharma, Layden framed the situation as a defining “Dreamcast moment” that demands a clear strategic pivot and choosing between hardware or software.

“You got to pick a lane. Either you’re going to be a platform competitive with PlayStation — which Xbox has not been competitive with PlayStation for years — but that’s not out of the window. You know, you can still make another run at it. And there are certain decisions you have to make around that about the platform. We talked about exclusivity. We talked about, how do you incentivize third-parties to support your platform in a meaningful way? This is all things around the platform business,” he said.

“Or you sit back and realize you are the biggest game publisher in the world. Well maybe Tencent’s bigger, but in the Western world you are the biggest game publisher out there with Activision and Blizzard and Bethesda and all the other pieces. Be that. This is your Dreamcast moment, when Sega decided we’re just going to be on PS2 and we’re going to get out of the hardware business and just be a great software company. It can be done. It’s been done before. So, that’s my advice. Pick a lane,” he added.

While Microsoft has recently signaled a renewed commitment to console exclusives and Project Helix, the ultimate resolution to Xbox’s identity crisis remains uncertain. Players have faith in Sharma and Layden, but it’s difficult to predict what will happen.

What do you think of Shawn Layden’s advice? Should Xbox double down on console hardware or become a publishing powerhouse? Share your thoughts in the comments below.

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