Former PlayStation executive Shawn Layden believes Xbox needs to make a clearer choice about what kind of gaming company it wants to be.

Layden, who spent decades at Sony and became one of PlayStation's most recognizable executives, recently told Microsoft to “pick a lane” as the company continues reshaping its gaming strategy under CEO Asha Sharma.

His comments arrive after years of major changes at Xbox. Microsoft has expanded its gaming business through acquisitions including Bethesda and Activision Blizzard, grown Game Pass into a major subscription service, and brought more of its games to competing platforms. That strategy has helped Xbox reach players across consoles, PCs, and other devices, but it has also made the company's identity as a console manufacturer less straightforward.

For players, that distinction matters. Someone who owns an Xbox may care most about exclusive games and hardware, while a PC or PlayStation player may appreciate having access to Microsoft's games without buying an Xbox. Microsoft's challenge is finding a strategy that makes sense for both audiences.

Shawn Layden Wants Xbox to Choose Between Platform and Publisher

Speaking on The Expansion Pass podcast, Layden argued that Microsoft has spent too much time moving between two different goals and needs to “pick a lane.”

In Layden's view, Microsoft could focus on making Xbox a top-tier console platform capable of competing directly with PlayStation. That would mean giving players compelling reasons to choose Xbox hardware, including meaningful exclusives and strong third-party support.

The alternative would be to lean more heavily into publishing and make Microsoft's games available to as many players as possible. Layden pointed to Sega's decision to leave the console hardware business after the Dreamcast as an example of how that approach can work.

Layden also questioned how Game Pass fits into Microsoft's broader strategy. The service encourages players to subscribe for access to a large library, while Microsoft also wants to sell individual games. Those approaches can complement each other, but they can also create questions about how the company ultimately wants players to spend their money.

Xbox Has a Lot of Players to Keep Happy

The tension Layden describes comes from the sheer number of directions Xbox now serves.

Microsoft can benefit from selling Call of Duty, Minecraft, and games from Bethesda to as many people as possible. At the same time, keeping certain games exclusive can make Xbox hardware more attractive to players deciding which console to buy.

The company has also built a broader ecosystem connecting Xbox consoles, Windows PCs, cloud gaming, Game Pass, and Xbox Play Anywhere. For players, that flexibility can be convenient. A game can follow them between devices rather than requiring them to stick with one platform.

The question is whether that flexibility ultimately strengthens Xbox as a console brand or makes the hardware itself less essential.

That creates an interesting situation for players with different preferences. Someone who primarily plays on Xbox may want more reasons to stay with the platform, while someone who plays on PC or another console may welcome Microsoft's increasingly open approach.

Asha Sharma Appears Ready to Put More Focus on Xbox Hardware

Recent developments suggest that Asha Sharma is giving the console side of Xbox's business more attention.

Sharma became Microsoft's Gaming CEO in February and has emphasized a renewed commitment to Xbox hardware. Microsoft has also announced that Gears of War: E-Day and Clockwork Revolution will be Xbox console exclusives, giving the platform some of the traditional advantages associated with a dedicated console.

At the same time, the company's broader strategy has not disappeared. Microsoft continues to publish games across multiple platforms while investing heavily in Game Pass, PC gaming, and cloud services.

That balancing act has also come with difficult decisions internally. In July, Sharma announced plans to eliminate roughly 3,200 roles during fiscal year 2027, beginning with around 1,600 cuts. She said the business needed lower costs and fewer management layers as Microsoft worked to improve its overall health.

Xbox May Not Need to Pick Just One Lane

For now, Xbox does not appear ready to fully embrace either of the paths Layden described.

Microsoft continues to operate one of the industry's largest publishing businesses while also investing in Xbox hardware and trying to give its consoles compelling reasons to exist. Rather than abandoning one side, Sharma's strategy may ultimately be about finding a balance between them.

That could be good news for players if Microsoft manages to make each part of its ecosystem stronger without making the overall direction harder to understand.

Layden's “pick a lane” argument raises a simple question: What exactly should Xbox be in the years ahead?

A console brand, a global publisher, or something that combines both? The answer could shape not only Microsoft's future, but also where and how millions of players experience its games.