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Former PlayStation Boss Says Gaming Faces "Existential Threat"

Non-endemic companies looking to disrupt the industry are "barbarians at the gate."


According to former PlayStation boss Shawn Layden, non-endemic companies like Netflix or Google are one of the biggest threats to the video game business today.

Layden spoke at a keynote on stage with head Christopher Dring at the website's Investment Submit last week. Listing his top three concerns for the industry in the years ahead, he claimed that "consolidation can be an enemy of creativity," and that "rising costs in gaming are an existential threat to all of us." He then referred to non-endemic companies like Netflix, Google, Apple, and Amazon as "barbarians at the gate."

Layden sees what happened to other entertainment spaces, like music and TV, as cautionary tales. The music industry was permanently altered by iTunes, for example. Netflix aided in destroying home video rental and changed consumers' relationship to the cinema. He is hopeful that gaming will disrupt itself, rather than being changed by outside forces. He said, "Where it doesn’t take a Google or an Amazon to completely flip the table. We should be smart enough to see these changes coming and prepare ourselves for that eventuality."

Dring pointed out that both Xbox and PlayStation were originally non-endemic companies. Layden granted that this is true, however he emphasized PlayStation's savvy entry into the market. Other non-endemic companies like MGM and Fox made serious efforts to enter the gaming space, but proved unsuccessful. He elaborated, "[Sony] knew enough that entertainment was its own beast, so Electronics knew it couldn't manage this business by taking all the guys from the CD division and go after games."

"So in the initial stages of the company, it was a joint venture between Sony Electronics and Sony Music Japan. They knew they had to bring the entertainment… right from the beginning. The people handling the advertising, marketing, publisher relations, PR – those were all Sony Music guys – and they were soliciting publishers to support the platform.

"PlayStation knew that we couldn't do what Sega and Nintendo did and [provide the bulk of the software], we didn't know enough how to make it. We had to be the third-party platform, so we had to get Namco, Square, EA, Activision. Those Sony Music guys are the ones that got Square to move Final Fantasy 7 off of Nintendo and onto PlayStation, probably the biggest sea change move.

"So yeah, we weren't endemic, but I think we brought the entertainment piece in, which really helped accelerate the success of PlayStation."

Meanwhile the efforts of non-endemic companies march on. YouTube just launched games on its platform for a few consumer testers. As of last month, you can now stream Netflix games on your TV and computer, as well as from your phone. The video streaming giant promised to launch over 40 games this year.

Grace Benfell on Google+

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