Sony Exec: Consoles Must Adopt VHS Strategy

Former PlayStation executive Shawn Layden has proposed a fundamental restructuring of the console gaming market to overcome stagnant hardware sales. Speaking on a YouTube channel, Layden argued that the industry must adopt a licensing model similar to the VHS format that defeated Betamax in the 1980s.

The core issue is that console sales consistently cap at around 250 million units per generation, regardless of total gaming industry revenue. Layden believes the solution lies in creating a universal gaming format consortium that would allow any manufacturer to build compatible hardware, effectively ending the era of platform exclusives and proprietary lock-ins.

The console market faces a persistent growth barrier that has remained unchanged for decades. According to Shawn Layden, historical data shows that total sales across all platforms in any given generation rarely exceed 250 million units.

He noted that the only exception occurred during the generation featuring the Nintendo Wii, which briefly pushed sales to nearly 300 million units. This spike was attributed to non-traditional consumers purchasing the console for fitness applications like Wii Fit.

However, Layden emphasized that this was an anomaly, stating: "We've still kind of flattened out. So we need to crack that cap, that barrier."

The distinction between total gamers and console owners is significant. While the broader gaming industry generates billions in revenue and includes hundreds of millions of users playing mobile games like Wordle or Candy Crush, the dedicated hardware market remains constrained.

Layden argues that the video game industry must study the videotape format war of the late 1970s and early 1980s. During that period, Sony's Betamax competed against JVC's VHS for dominance in home video recording.

Despite Betamax offering superior initial quality, VHS achieved market dominance through three key strategies:

• Broader licensing to multiple manufacturers
• Longer recording times
• Stronger partnerships with movie studios for rental and purchase availability

Layden explained the consumer psychology behind the victory: "People didn't understand that need of having the same machine as your neighbor. You can have an RCA TV and you can have a Sony TV and you know that's all fine. But once your neighbor has picked VHS and you want to watch that tape of that movie, but you have Betamax, all of a sudden… So the industry coalesced around VHS."

The executive contrasted this with Sony's later success in optical media. When Sony and Philips created the compact disc consortium, they licensed the patent widely, allowing manufacturers to compete on device quality rather than format compatibility. The same approach worked for DVD and Blu-ray.

The proposed solution involves creating a gaming format consortium that would standardize the underlying technology of consoles. Layden suggested this could potentially be built around a Linux kernel or derived from existing PC architecture.

Under this model, licensing programs would enable various manufacturers to produce hardware that runs the same software. Competition would shift from platform exclusivity to device features, pricing, and quality—similar to how different brands of Blu-ray players compete today.

Layden stated: "I think we need to get in a world where we have a gaming format. Maybe it just comes from PC. Maybe we find a way just to do it all in a Linux kernel or something. And then we have a consortium around that. We have licensing programs which allow other manufacturers to build into that space, and then you can talk about real numbers moving."

This approach would theoretically allow the market to reach "ubiquity of the toaster," where gaming hardware becomes a standardized household appliance rather than a walled garden ecosystem.

The greatest obstacle to Layden's vision is the strategic value of exclusive titles. Currently, Sony, Microsoft, and Nintendo rely on proprietary games to sell hardware.

Layden acknowledged this reality: "I don't think every game has to be console exclusive. I don't think every game should be console exclusive, but I do accept the fact that if you're going to have platform companies like Sony and like Nintendo largely — Microsoft is more of the Xbox everywhere anywhere — there is a huge value to the brand of having strong exclusives."

The prospect of shared platforms would mean the end of iconic franchises remaining locked to specific hardware. Layden illustrated the cultural shock of such a shift: "If Mario starts showing up on PlayStation, that's the apocalypse, right? Cats and dogs living together. And the same goes for Nathan Drake and Uncharted. They make the platform sing."

Current market dynamics suggest this change is unlikely in the near term:

• Microsoft has moved toward a multiplatform strategy but maintains Xbox hardware
• Sony releases some titles on PC but remains committed to console exclusives
• Nintendo maintains the strictest exclusivity, keeping franchises like Zelda exclusive to their platforms

Despite these challenges, Layden's proposal highlights a fundamental tension in the console market: the desire for industry growth versus the business value of platform lock-in.