Shawn Layden, former PlayStation executive, says console makers must adopt a VHS-style licensing model to break the 250 million sales cap per generation — a radical idea that could redefine exclusivity and market dominance.
Video game console sales cap out each generation at around 250 million, so how will the console manufacturers break through that barrier? By learning a crucial lesson from the videotape format war, one former PlayStation executive has suggested.
Speaking on the Pause for Thought and Naomi Kyle YouTube channel, Shawn Layden, former boss of Sony Interactive Entertainment America (SIEA), said the console video game market has hit a limit, and significant change is needed to expand beyond it.
“We talk about gaming as being this $250 billion industry, which it is, and have hundreds of millions of users, which it does,” he began. “But of course that includes if you’re playing Wordle, you’re a gamer. If you’re playing Candy Crush, you’re a gamer in that number. But the number of discrete consoles sold over any particular generation caps out about 250 million. If you line up all the PS1s, Sega Saturns, and N64s, and you go by generations, it’s all about 250. The one time it popped to almost 300 was the generation that had the Wii, and people thought you could buy Wii Fit and lose weight. So, we got some non-traditional gaming audience to buy into the gaming industry at that time. But that was an anomaly and we’ve still kind of flattened out. So we need to crack that cap, that barrier.”
But how? Layden said the video game industry should study the past as it looks to the future, in particular Betamax’s loss to VHS in the videotape format war.
The videotape format war was a late 1970s/1980s battle between Sony’s Betamax and JVC’s VHS for dominance in home video recording, with VHS ultimately winning due to longer recording times, broader licensing (more manufacturers), and key partnerships with movie studios, making movies available for rental/purchase on VHS more readily, despite Betamax often having slightly better initial quality.
“Betamax lost to VHS for one reason only: that VHS licensed its format across many different manufacturers,” Layden explained. “Sony held the unique Betamax patent trademark and everything. There was a license we did with Toshiba towards the end of the lifecycle, but it never went wide like VHS.”
“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.”
“Then later on, Sony and Phillips created the compact disc consortium. They created the patent and then they licensed it out to all the other manufacturers. Same thing happened with DVD. Same thing happened with Blu-ray. They said that we’ll compete on the device. So if you get a Bang & Olufsen Blu-ray player, it’s going to cost you more than the Sanyo version, even though they’ll both support the platform, but they’ll have different bells and whistles.”
This, Layden said, is exactly what the video game industry should do: create a gaming format consortium of sorts.
“I think we need to get in a world where we have a gaming format,” he said. “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. You know, that’s how you get to the ubiquity of the toaster. But right now, I think we’re trapped in this containment field.”
Following Layden’s thought here though, it would require Sony, Microsoft, and Nintendo to come together to agree upon a singular gaming format that means all video games play on all consoles. Not only that, but any company would then be able to try its hand at making a PlayStation or an Xbox, and compete with the first-party console manufacturers in the market.
How likely is that to happen, though? Maybe there’s a world in which Microsoft does something like this with Xbox, given its current multiplatform policy for its video games. Sony releases some of its games on PC (and, with Helldivers 2, finally on Xbox), but it seems a long way from a blanket multiplatform policy. Nintendo is perhaps the least likely of the three to join forces with its console rivals. You’ve always needed a Nintendo console to play The Legend of Zelda (officially), and I can’t see the next mainline Zelda game coming out on anything other than the Switch 2 when the time is right.
Essentially, it would mean the true death of the console exclusive. For now, though, console exclusives remain a thing, Layden insisted. “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.”
“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.”
Currently, Sony, Microsoft, and Nintendo are still very much in the business of making video game consoles that play only games released for those consoles. Sony is plotting the inevitable PlayStation 6, Microsoft has committed to releasing a next-gen Xbox, although it sounds like a PC/console hybrid, and Nintendo just launched the Switch 2 (perhaps the Switch 3 will follow).
What Layden’s proposal means is a fundamental shift in the industry’s business model. The current ecosystem, where each company controls its own hardware and software, has been a source of innovation and brand loyalty — but it also creates a closed loop that limits market penetration. The VHS model, with its open licensing, allowed for a broader audience to participate — not just by buying a VHS player, but by choosing a format that everyone else could also use. That’s the key to scaling beyond 250 million units.
It’s a radical idea — one that would require unprecedented cooperation among the industry’s three giants. But if the industry is to grow beyond its current plateau, it may be the only path forward. The question now is whether Sony, Microsoft, and Nintendo will listen — or if they’ll continue to play the game as it’s been played for decades.
For developers and players alike, the implications are clear: a more open, standardized format could lead to a more accessible, vibrant, and expansive gaming ecosystem — one that doesn’t rely on proprietary hardware to reach its full potential.
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