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Video game brain drain: Top execs leave industry

SeongJoon Cho | Bloomberg | Getty Images

As the video game industry says goodbye to one generation of hardware, it's also saying goodbye to a number of high-profile names.

In the past several weeks, well-known, high-ranking executives at Microsoft's Xbox division and Sony's PlayStation unit—as well as other less familiar names—have announced their departure, and some analysts say these could reflect broader shifts in the industry.

The exodus started quietly earlier this year, but it was the announcement that Jack Tretton, president of Sony Computer Entertainment America, was leaving that brought the shift into the spotlight. Tretton was, for all intents and purposes, the public face of PlayStation as well as the person calling the plays since 1995.

And, for many gamers, it was his heartfelt and nonscripted apology for the PSN hacking incident at E3 in 2011 that began the corporate healing process. His next move has not yet been announced.

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This week, Marc Whitten, chief product officer of Xbox (and, as a 14-year Xbox veteran, one of the most senior members of that system's team) announced he would be leaving to join wireless audio company Sonos.

Analysts say the departures of Tretton and Whitten from the console industry—as well as executives at other companies, including Steve Carlin (who left Ubisoft to become global head of strategy for gaming at Facebook) and Jeff Brown (who left EA to join GoPro)—are not directly related, but could still reflect an underlying trend.

"It's no secret that the dynamics and skills set required to be successful in gaming have evolved dramatically in the last five-10 years," said John Taylor, managing director at Arcadia Investment.

"As the publishing model has been increasingly displaced by free-to-play and the product model has begun to morph into games-as-a-service type of offering, many of the senior folks, who were comfortable in the box-based world are now trying to manage businesses that are radically different than what they grew up with—and trying to manage skill sets that are foreign to them."

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The launch of the Xbox One and PlayStation 4 have both been successes by any measure, but there remains some concern among investors and game industry insiders about the long-term health of the console market.

With so many platforms and devices competing for the attention of gamers, it may be difficult to continue to record revenue numbers on par with previous console generations.

Those fears are forcing many companies in the game industry to regularly re-evaluate their products, which may be causing some executives to re-evaluate their desire to stay.

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Ironically, while the departures of Whitten and Tretton shocked the gaming world, the one executive long rumored to be on the way out has stayed put. Nintendo's Satoru Iwata has made it clear he has no plans to leave, even with the company dramatically slashing its sales and financial forecast earlier this year.

That, says Taylor, could be because of the different mindsets of Western and Eastern game companies.

"I think there's a greater group responsibility for what's going on at Nintendo than you would expect to see here in the West," he said. "My sense is Iwata is the public face of a lot of forces that operate behind the scenes. There's no question the missteps and misdirection in Nintendo's product strategy are the responsibility of a large, large group of people."

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And while there might be some concern about the sheer volume of historical knowledge leaving the industry with these executives, analysts say the rapidly changing nature of things will make any hurdles temporary.

"At some level, you need to bring in new talent because consoles are no longer a packaged goods business," says P.J. McNealy, CEO and founder of Digital World Research. "It is, though, always better to see these sorts of departures after a console launch instead of before one."

None of the companies mentioned returned calls seeking comment.

—By Chris Morris, Special to CNBC.com.

Correction: An earlier version of this story had an incorrect job title for Steve Carlin.

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