The DeanBeat: Sony’s executive change makes you wonder how much the old guard is necessary

Jack Tretton spent 19 years at the gaming division for Sony in North America. PlayStation runs in his blood, but he is stepping down from the job of president and chief executive of Sony Computer Entertainment America on March 31. And so change comes to Sony. The question for the rest of us to interpret is: Why now?

Tretton served his company well and just won a big battle in the console war. But I don’t know why he would leave right now. I don’t have much to go on. I feel like one of those observers of the Kremlin under the old Soviet Union. I can only interpret what’s happening inside Sony’s game division by the occasional shake-ups. And my main observation is that the old guard isn’t valued the way it used to be in games.

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Yesterday, when the news was announced, “Jack Tretton” was trending at the very top of Twitter. Gamers clearly care about who is the steward of their favorite addiction. He launched the PlayStation 4 in North America and soundly beat the more expensive Microsoft Xbox One in units sold. Tretton is old school, with tight relationships with the nation’s retailers. He knows how to sell physical boxes to the big retailers. So do his bosses, Andrew House, head of Sony Computer Entertainment, and Kaz Hirai, chief executive of Sony. They’re all PlayStation veterans. Losing one of them shouldn’t be too be a change, right?

Sony is in great shape in the beginning of a new console generation. Microsoft has challenges with a more expensive Xbox One, and Nintendo is pretty much out of the running with its Wii U console.

But that doesn’t mean it’s time to coast.

There are still many challenges ahead as alternative game platforms multiply and entice players away from home machines that cost hundreds of dollars and console games that cost $60 each. This generation is off to a great start, but it could very well be the last generation of consoles if the makers aren’t careful, according to a former Sony insider who spoke on condition of anonymity. The threat to the consoles comes from free-to-play mobile and online PC games.

Sony and Tretton indicated in press statements that his departure was amicable and mutually agreed upon. No one can say just yet if he was pushed out or resigned because of a difference in philosophy with his bosses. We don’t know if something went wrong or was about to. But the departure of a longtime executive at a time when everything seems rosy suggests that there’s a lot of soul-searching going on. And many other people in the industry feel this way, I’ll wager.

“Nothing lasts forever,” said Trip Hawkins, CEO of If You Can and the founder of video game companies like Electronic Arts, 3DO, and Digital Chocolate. “For what it’s worth, the entire console industry for the last year has been overly optimistic about a return to glory. The new hardware may improve things, but we’re not going Back to the Future of console dominance. The future is Internet, mobile, cloud, app, social, browser. Consoles will survive but become more like sports cars.”

Hawkins has gone through a lot of changes during his career and reinvented himself several times. Tretton has ridden a rollercoaster at Sony, whose fortunes have changed dramatically during his tenure. He and his colleagues got the PS4 out the door when many doubted whether the consoles would survive at all.

I wouldn’t say the end is near. But I do worry that without big hits, the enthusiasm for the new consoles may fizzle.

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Another way to look at the management change is to examine who Sony replaced Tretton with: Shawn Leydon, the executive vice president of Sony Network Entertainment International. Tretton had North American retail chops. Leydon is an international network guy, with experience in digital distribution of entertainment.

It is quite possible that Sony will sell more games the digital way than the physical with the PS4. The PlayStation Now cloud gaming service waiting in the wings could prove strategically important. Launching that correctly without protecting the legacy retail business will likely be very important.

Sony has been a bit slow to jump on the online bandwagon in the past, as it has chosen instead to let Microsoft blaze the trail. But it feels like the time to experiment is over, and that the console makers have to sprint into the modern game era.

Microsoft has also gone through its own leadership travails. Don Mattrick, the former head of the game business and one of the contenders to take over Microsoft, took a job last year as the CEO of Zynga. For a time, Microsoft CEO Steve Ballmer put Julie Larson-Green, a non-gaming executive, in charge of Xbox. That cascade of change eventually swept Ballmer out of the top job and led to the appointment of Satya Nadella as Microsoft’s CEO. And with the most recent change, former Nokia CEO Stephen Elop is now the head of the Microsoft division that includes both Xbox games and phones.

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At Electronic Arts, John Riccitiello was replaced by studio executive Andrew Wilson as the chief executive. Riccitiello wasn’t slow about embracing changes that were disrupting the business, but he did suffer from a lack of big new hits.

The common thread is that these executive changes all took place at companies that were still making money. But the changes were understandable because of the fear in boardrooms about what is happening to the traditional game business and how it is giving way to something where expertise in social-mobile-online matters. The value of old guard expertise in retail, physical disks, and $60 games is diminishing.

Right now, the console game business is strong and enjoying a resurgence. But under the surface, there’s a lot of change and lot of fear. I am not at all surprised that Tretton has been replaced. I expect a lot more change to happen before the dust settles on the new era of gaming.