Shawn Layden: "AA is gone and that's a threat to the ecosystem going forward"

Gamescom Asia opened its doors to industry attendees in Singapore this morning, kickstarting the day with a fireside chat with former Sony Interactive Entertainment Worldwide Studios chairman Shawn Layden.

In a conversation with Raw Fury co-founder and chief publishing officer Gordon Van Dyke, Layden gave his thoughts on the disappearance of AA studios, and why that's a bad thing for the industry going forward.

"[In the past] we spent a lot more time looking at games and not asking 'what's your monetisation scheme', or 'what's your recurrent revenue plan', or 'what's your subscription formula'? We asked the simple question: is it fun? Are we having a good time? If you said yes to those questions, you'd usually get a green light. You didn't worry so much about the end piece, for better or for worse. Of course back then you didn't make a game for millions [of] dollars. So your risk tolerance was fairly high.

"Today, the entry costs for making a AAA game is in triple digit millions now. I think naturally, risk tolerance drops. And you're [looking] at sequels, you're looking at copycats, because the finance guys who draw the line say, 'Well, if Fortnite made this much money in this amount of time, my Fortnite knockoff can make this in that amount of time.' We're seeing a collapse of creativity in games today [with] studio consolidation and the high cost of production."

Layden has been vocal in the past about his wish to go back to shorter games, and the need to rethink spiralling costs across the industry. Van Dyke asked the former PlayStation exec whether we can find solace in indies, whether they can be seen as a "beacon of hope" when it comes to thinking about creativity first, and monetisation second, if at all.

"I think you're right," Layden answered. "You know, we've seen the same phenomenon in the film industry, right? We've come across to a place where everything is blockbuster, Marvel Cinematic Universe, or it's Sundance award contender. And then in the centre, that middle piece, which used to be Tom Hanks and Meryl Streep [in] Vermont... You can make that movie. People went to the theatres to see it. But those movies and that kind of content found a place to go. It went to Netflix, went to Amazon, to Apple Plus, all the different streaming services, it had a place to go.

"If we're just going to rely on the blockbusters to get us through, I think that's a death sentence"

"In the gaming business you have Call of Duty, Grand Theft Auto, indie stuff. But then that middle piece, that middle layer that used to be where Interplay, Gremlin, Ocean, THQ, all those companies, made their money... That middle piece is gone. If you [can become] AAA, you survive, or if you do something interesting in the indie space, you could. But AA is gone. I think that's a threat to the ecosystem if you will. So I'm looking at indie stuff… With the advent of technologies, like the latest Unreal Engine or what Unity can give you, I think we can all say that the standard quality of video games is pretty high now compared to ten years ago."

He highlighted that modern tools have given games a certain base level of quality, which is a net positive, unlike ten years ago when bad games were simply broken.

"Now if we can just get a bit more interest and excitement and exposure for these lower budget, but super creative and super unusual [type] of games... I'd like to see more of that. Because if we're just going to rely on the blockbusters to get us through, I think that's a death sentence."

When asked about what strategy to adopt for the few AA studios that still exist, and where these should find their niche between the graphic fidelity of AAAs and the risky innovative approach of indies, Layden said AA has a natural niche, which is to bring "the new thing" as opposed to, for example, "a dollar store version of God of War."

"Bring something that you sort of challenge yourself to see – the gaming media, this medium, is so flexible, it can do so many different things," he continued. "So I think your strengths in AA are going to be [that] your time to market should be faster. You know, to get 1,500 developers to do the next [GTA], that's not the place you need to go for your AA. If you're a developer, you've got to be able to say, 'I can get something up and running in two to three and a half years'."

Seek unique ideas or a different spin on something you know, he added, but most importantly: don't lead with monetisation.

"If you're going to pitch me your AA game, and in the first two pages of your deck is your monetisation and revenue, subscription scheme, I'm out. Your first page has to be 'This game needs to be made and here's why'.

"I want to see that fire, I don't want to see 'here's the chief accountant on the team that's going to explain to you the [game's monetisation]'."

"All this excitement about gen AI, I find kind of humorous. [...] It's just a tool, it's not a saviour"

What's for sure is that AI is not the magic formula that's going to help the industry through its current challenges, Layden said, pointing out that people who think AI is going to revolutionise games are usually not people in the industry.

"Artificial intelligence has been in gaming since almost the first or second games ever made," he reminded the audience. "So all this excitement about gen AI, I find kind of humorous. I do see its applications in certain places for certain things. But it's just a tool, it's not a saviour. It's a tool in the way that Excel is a tool. It just helps speed you along your tasks."

He mentioned practical applications in QA for instance, to run simulation models, as Sony actually demonstrated in a recent talk at CEDEC about how it used machine learning to improve its testing of Astro's Playroom.

"I think it helps with ideation," he added. "You can get a really good pitch deck done fast using AI."

Finally, Layden also touched upon the opportunities that Asia represents for the games industry.

"I look at Asia, South Asia, this part of the world, as where all the next great opportunities are going to come from – and the level of the game development talent here grows faster than the rest of the world," he said.

"I think here in Asia, where we have a lot of small, scrappy studios with good talent, they just need to break [through]. It's just a bit of luck, to find the right IP, or to find the right platform. I'd also like to see more games being made in that country, in that culture. It's like, 'if my game doesn't sell a lot in California, I'm not successful'. Well, California's not your market. Look at the markets here, they're growing, the economies are robust. There's more disposable income. You can make a great game in Indonesia for that market.

"Don't think that the Western market is the be-all and end-all of your activity"

"And I think that's so important for the overall global gaming system because, the one thing I've been talking about in my five years since I've retired is very simple: we need more people playing games. It's a $250 billion global business but the actual number of players doesn't grow at the same pace. So we're getting more money from the same people. You need to get more people playing games. How do you do that? We need to get more people making games.

"More people around the world have to be in the business or the art of making games. Make it for your neighbours. Make it for your friends. Make it for yourself. But don't think that the Western market is the be-all and end-all of your activity. Build it here, be successful."