Shawn Layden Interview: PlayStation Legend on PS6, Single-Player Games Return & Gaming The Industry

Hey fellas, it's great to be here.

How much time you have? I mean, there are many different versions of that. There's the postage stamp version, and then there's the encyclopedia Britannica version. Just to get something in the middle of it. Drew, Michael, congratulations on your new show and getting that in the video world. I think that's where all the eyeballs are these days. Sometimes I wonder if reading is a lost art. But you definitely need to be in this space and so congratulations on that. My potted history is I began with Sony Corp back in 1987. So before any of your listeners were born, I joined Sony in '87. I joined Sony in Tokyo.

So, this is something that I point out to people because I want to be able to say I didn't know at the time. We didn't have the terminology then, but I was a diversity hire. I was a DEI hire by the Japanese corporation to internationalize Sony Corp from within. So, I joined in the headquarters in Tokyo doing communications work for them. Laterally, I went to work as the assistant to Akio Morita, the founder, the co-founder and chairman of Sony, which was an incredible five-year experience. And then I moved over to the PlayStation group, Sony Computer Entertainment back in 1996.

Just when the PS1 was getting off the ground, we just launched in North America and Europe in late '95. I'd come out of corporate, moved over into gaming. Simply because I knew the president of SCE at the time, a guy named Teruhisa Tokunaka. And he had asked me, hey Shawn, we've got this video game company going. You want to come join it? And I just said to him, honestly, I don't know anything about video games. He said, oh, that's all right. None of us do. That's why this is the best time to join. And so there I was not knowing what I didn't know and joined into the video game group. That was '96 and my career three years later took me to London. We bought a company called Psygnosis which is a huge game studio in Europe at the time and we as we say integrate the asset and bring that under the rule of Sony. And then went back to Japan in 2007, left London, went back to Japan to run sales and marketing for Sony Computer Entertainment Japan for three years, then came to America back in 2010 to start a company called Sony Network Entertainment, which hosted the PlayStation Network and all of Sony Corp's online activities, which was nuts.

And then in 2014 I came back home from Sony Network Entertainment, came back to Sony Computer Entertainment as CEO of SCE America and managed the North American and South American business for the company and then became chairman of Worldwide Studios. My first love is in game development. That's where I started back in '96 and managed to after my 10 dark years in sales and marketing, I came back into the fold and found myself overseeing our studios during the PlayStation 4 era where we had some great games. Michael, even in Xbox Land, you probably heard of God of War and Uncharted and Last of Us and Spider-Man and things like that. So I got the reputation of being the first-person narrative adventure drama guy. Those are the kind of games we made during my time there. And then in late '19 on the precipice of PlayStation 5, I decided 32 years with Sony. That was a good run. Didn't expect on spending that long in one company, but did and so I decided to step down at the end of '19 before we launched PS5. Launching a new console is its own kind of specialized song and dance. You know, you've got hardware specs that are changing, you know, by the week or by the day. You've got games you're making against these ever-changing hardware specs that have to be done and hit the market the same day the hardware hits. It's really hitting a bullet with a bullet to launch hardware with new games simultaneously. And I'd done that five times already. And it's the most exhausting thing in game development and testing hardware. So I thought it was time for me to step down and let some other people have the fun of it. So here I am. It's now what, six years, seven years since I've stepped off the PlayStation rocket. And so now I make my time here in San Francisco, split my time a lot of time in Tokyo as well. Working with some startups trying to we can maybe talk later about my view of how the whole publishing model needs to change in gaming.

We're at a real fork in the road here. It's not really a fork. It's a fork in the road, but one of the forks goes to oblivion, and you don't want to take that road. So, we're trying to create the alternative in this new age of gaming. So, I've got one of those off the ground. I've got a little stuff going on in the sports world, some music stuff. And the nonprofit I spend most of my time with is called Girls Make Games Scholarship Fund, trying to get more women into coding and engineering. And so, that's it. I don't know how long that took, but that's pretty much where I am right now. And I live in San Francisco with three cats.

For a very little bit.

Well, I had chilled out. I was retiring and then what happened was I stepped down from Sony and almost on cue COVID happened. And the whole world shut down. And so my quiet retirement was kind of quiet retirement for the planet. Except we all had to find ways to survive and get on and that kind of thing. So during that time I got a lot of outreach from different places looking if I could do a little advisory, you know, do a little consulting, do a little bit of that and the other thing. And so it's been kind of like that. My time with Tencent was as a consultant. Was as an adviser. So, I was just able there to help them with some of their strategic thinking on what they want to do and where they should go and do it. I did that with some other companies as well. So, I really haven't had a job per se since leaving Sony. And frankly, it's like I said to a friend, he said, 'So, don't you want to get back in the corporate gig?' And I said, 'After 30 years of corporate, I realized I never want to do a budget ever again.' And more importantly, I never want to do a performance review of another human being for the rest of my life. There's nothing more soul destroying in the corporate world than the annual performance review.

Okay.

Oh, I don't want to make you do it, but I have to. How much time do you have? You know, it's been banded about in the press, and I'm not going to say it was incorrect. But, you know, some of the many factors that went into my thought process about is this time for me to step down? Console transition seems like a natural point in time, but also there was this huge change in the industry. There was the Fortnite effect. And Fortnite came out, became a huge juggernaut, bigger than anything I'd expected. Least of all, Epic didn't expect it and no one else did. And then we started to see, you know, there's things like Minecraft and Roblox, which are over there doing kind of a UGC, but also you can spend your all day in the sandbox, and that could be, you know, an interactive experience. Warzone came out trying to muscle into some of that Fortnite space. And then you had a lot of other free-to-play either extraction shooters or looter shooters or games of that stripe which are trying to create these communities, these persistently online communities and they forever game, the game that never ends.

And that was the new hotness back in like '18, '19 or 2020. I think a lot of big corporations looked at that business model and thought hey recurring revenue subscription models we can flatten the volatility of revenue that is typical of gaming or typical of any entertainment enterprise to be honest you know you spend a lot of money then you launch your product and it was successful hooray or you spend a lot of money you launch your product not successful oh that's a problem. But it has this sort of peaks and valleys and I think a lot of people who come from a finance background want to find a way to flatten that curve or flatten the peaks or you know ameliorate the valleys to try to bring just a steady revenue stream over time that they can predict against. I think we saw a lot more people in the CEO jobs in large game developers and publishers coming from financial backgrounds rather than let's say engineering or art or design or even marketing. And when you start prosecuting the game business from a financial lens, I mean, it's like the old saying about hammers and nails. If you're a finance person, every solution has to be a spreadsheet. And we tried to create the spreadsheetization. There you go. There's a word for you of game development. And that wasn't really my jam. It wouldn't be something I'd be terribly good at. And I knew that. So, I stepped away. I saw the industry go in that direction. I think the pandemic and the lockdown created kind of a false oasis in the gaming industry where all of a sudden they go, 'Wow, look at that.' You know, we don't have E3, we don't have Gamescom, we don't have any of these huge expenditures, but our operating income is increasing because revenue is going up and costs are remaining flat or in fact going down, right? There was no business travel. There was, you know, a bunch of capex or costs associated with running a business went almost to zero during the pandemic. But the user base was trapped at home looking for something to do. And they leaned a lot into gaming. People who were lapsed gamers got back into gaming for lack of anything else to do. And so it created this, what was it like a 20 to 23% year-on-year revenue increase in gaming from 2021 to '22 or whatever it was. A lot of companies then saw that this is the new juggernaut. They staffed up for it. They hired tremendous amounts of people trying to create the next, you know, live service phenomenon, the next Fortnite. I think folks who came after me at PlayStation were pretty much bought into doing that.

Yeah, I guess it's going to come up. And you know, I kind of felt at the time, well, you know, maybe this is the future. And I don't see it because I've been at it too long. I've been too close to it for 30 years of my life that maybe I just can't see what the next big thing is. For example, I didn't predict Twitch. There was a chance earlier in my career that we could have possibly acquired Twitch in the early days of PlayStation Network. But, you know, I'd look at and go, who's going to spend time watching other people play a video game? Who wants to do that? So I raised my hand. I, you know, grandpa couldn't figure it out. So in the current milieu, I thought perhaps this whole live service gaming, these forever games, these games that have no end, and in some ways the games that have no energy other than repeating the activity again and again and again, the repetitive motion device, if you will.

So that was fine. You know, that's the way the world goes and I'm over here. And then that started to collapse. People realized that rather than the castle on the mountain of the future, it was more the chimera that kind of vanished as you got closer to it. And Fortnite is a thing, but Fortnite is the exception that proves the rule.

In the forever gaming world, how many forever games can one person play at a time? It's exhausting.

Yeah.

I mean, just think of games like books. Have you had forever books? I'm going to read this book, but this book never ends. For some folks, maybe that's, you know, the world of George R. R. Martin where the writing of the book never ends. But in gaming I think it's a pendulum, right? We all get excited about one thing. There was a time when are you guys old enough to remember Toys to Life?

And before that was Skylanders.

And then Nintendo tried something. There was a time we all thought that was the future and then it wasn't.

And I remember that one. I remember that one. So, everything has its time of the season for all things. And I think the pendulum is now swinging back in the gaming world that people are saying, I want games that I can complete. For me, a game, and I'm sorry, I'm just kind of rambling here.

For me, a game has really got to have three components. And I got slated on social for saying this. And I just want to say it's my opinion what a game is. It's not telling the world what a game is. Okay. But my opinion of a game, it's character, it's world, and a story.

Ideally, all three, but at least two. And with that, I can incentivize myself to want to go through it and see what happens to this character and how can I help achieve the story goals and see the end of this world, see everything fantastical that has appeared. You know, we even had that problem back when I was leaving the gaming industry that games were just too big. Forever games are one thing, those stretch to infinity by definition, but even regular AAA games are becoming so big. Some data was showing that only 30% of players ever see the end of the game or less.

Well, that's part of it, you know, and so this drive toward let's have AI tools build games because then we can have all the games in the world. And I keep saying the problem is not a dearth of games. The problem is not we don't have enough games. That is not the problem, people. So making all these ways to create pseudo games that can come and flush the market is probably a bad idea. I think we have a lot of games. I think we have a lot of similar games.

Sure.

Yeah.

Yeah. Yeah. You know, Michael, I know you're not a PlayStation person, but Drew, if you remember on PS1, what were the big genres on PS1? Racing games, fighting games, sports games, and RPG. Oh, no. Platform games. Remember when that was a category?