Inside the big change in Xbox leadership at Microsoft

Xbox fans have been anticipating the retirement of Microsoft Gaming CEO Phil Spencer For years, but what many did not expect was the departure of the head of Xbox Sarah Bond also. To many outside the company, Bond seemed like the natural successor to Spencer, a deputy of sorts.

CEO of Microsoft Satya Nadella And CFO of Microsoft Amy Hood Obviously I didn’t agree.

Instead of casting Bond in the role, Microsoft promoted him Asha Sharmaa former Microsoft AI executive, has come to the Xbox summit. The decision to overlook Bond may have surprised many Xbox fans, but for more than a dozen current and former Microsoft employees I spoke to, it seemed inevitable in recent months.

Long-term Xbox boss Phil Spencer made the decision to resign from Microsoft last year after a difficult few years for Xbox. The giant Activision Blizzard acquisition has lasted much longer than Microsoft expected, and the need to grow the business has seen Microsoft move away from Xbox-exclusive games in favor of a cross-platform strategy. Microsoft is also trying to reinvent the Xbox brand outside of the console realm, with mixed results.

Spencer’s decision led to months of careful planning for the successor. It was announced to the world on Friday, but it was supposed to happen today. Microsoft had to announce early because it started leaking and IGN He was planning to publish a story, according to sources familiar with the situation.

This began a day of chaos, as teams within Xbox first heard news through reporters and the media, rather than internal memos. The team managing Sarah Bond’s social media accounts was so unprepared that A.J Share LinkedIn A call for people to provide feedback on Xbox accessibility features went live just before its departure was announced. He remained there for hours, until Bond’s team eventually arrived She published her own memoir.

Microsoft executives shared four memos with Xbox teams on Friday, but only Phil Spencer mentioned Bond. Satya Nadella, Executive Vice President of Microsoft Gaming Matt Bottiand new Microsoft Gaming CEO Asha Sharma, all had kind words for Spencer, but made no mention of Bond. Even Bond’s own memo to her team didn’t arrive until hours after the announcement and wasn’t part of Microsoft’s blog.

Some Xbox employees I spoke to saw the writing on the wall for Bond last year. She was promoted to head of Xbox in October 2023, just days after Microsoft’s promotion It terminated its $68.7 billion deal To acquire Activision Blizzard. Bond was crucial to getting the deal through with regulators and slowly began to become the face of Xbox as Spencer took on the complex tasks of integrating the massive new company into Microsoft Gaming.

Six months after Bond was promoted to Xbox CEO Karim Chowdhurywho reports directly to Bond, Microsoft is gone It sparked another change in some teams within Xbox. Choudhry was key to supporting Xbox backward compatibility and helped revive Xbox Cloud Gaming as xCloud in 2019.

Just weeks after former Xbox marketing director Chowdhury left Gerrit West also He left Microsoft In June 2024. This means that the Xbox marketing team now reports directly to Bond. A month later, Microsoft delivered A Marketing campaign This indicates that people don’t need to buy an Xbox console anymore. The message was “You don’t need an Xbox to play Xbox,” because the games were available through Xbox Cloud Gaming on TVs.

This was all part of Bond’s “Xbox Everywhere” strategy, a vision to take the Xbox brand beyond its roots in console hardware. Months later Launch of the “This is Xbox” campaign.with commercials positioning the phone or tablet as an Xbox instead of just a console. It was a confusing campaign, and I’m told it offended many Xbox employees internally.

“This is an Xbox” also debuted months after Bond appeared on stage at the Bloomberg Tech Summit Announced the Xbox Mobile Game Store It was supposed to launch in July 2024. It still doesn’t exist nearly two years later. Although attempts to redefine Xbox were clearly tied to its mobile store efforts, Microsoft continued to push forward with “this is Xbox” after The store was late.

The shift away from console, led by Bond, under Spencer’s supervision, has not gone well for Xbox. Xbox revenue from Microsoft He refused For three consecutive fiscal years, the revenue decline looks set to continue throughout fiscal 2026.

Most current and former Xbox employees I’ve spoken to in recent days are relieved that Bond is leaving Microsoft. I’d heard from multiple sources that Bond was difficult to work with, and built a team structure that meant that if you didn’t follow the vision or question it, you would get left out. However, most praised its ability to forge partnerships with companies and developers.

Written in December 2024 Bond “stakes her professional reputation on the idea of ​​Xbox being everywhere, across multiple platforms and devices.” This also included carefully managing her image both internally and externally, making her look like a player like Phil Spencer. In fact, it wasn’t.

He realized that Bond’s strategy was a failure internally and was questioned several times. Bond tried to push mobile and the cloud into console, to reach millions of potential Xbox customers, but the result was a classic case of chasing tomorrow’s customers by neglecting today’s customers.

Phil Spencer’s retirement seemed inevitable to Xbox employees, especially over the past year. In February last year, Spencer took an extended sabbatical, and I’m told some teams had to wait weeks to sign off on some major changes. Shortly after this leave, rumors began circulating within Microsoft that Spencer was preparing to retire. Microsoft was last He had to deny the rumours In July, he claimed Spencer wouldn’t be retiring “any time soon.”

With Spencer’s official retirement, Microsoft is hitting the reset button on Xbox’s Bond strategy rather than embracing it further. Microsoft Gaming CEO Asha Sharma is now promising “the return of Xbox,” in a clear message to employees that the strategy over the past few years has not been working. “I want to go back to the rebellious spirit that built Xbox in the first place,” says Sharma.

Xbox employees I spoke to were concerned about Sharma’s appointment, especially because of her previous role as an AI executive at Microsoft. There is also concern about its lack of industry experience in entertainment and gaming. Sharma has made it clear that she is not a fan of games and spent the weekend responding to people on X and even taking game recommendations.

Some Xbox employees worry that it will force AI into everything Xbox does, but Sharma was clearly prepared for that reaction. “As monetization and AI evolve and influence this future, we will not chase short-term efficiency or flood our ecosystem with soulless AI,” Sharma said in her note. “Games are and always will be art, made by humans, and created using the most innovative technology we have to offer.”

Another concern is that she was hired by Nadella as a sort of executioner for the Xbox console. Its memo doesn’t mention this, and Microsoft could have easily placed Matt Booty in this type of role to push game publishing rather than the Xbox console. I get the impression from sources that Microsoft wants a change and is concerned about losing Xbox, as it is one of the only successful consumer brands left.

Those who know Sharma best describe her as enthusiastic, willing to learn, and very capable of pushing teams to execute on a clear vision rather than acting as a product implementer. She also has a history at Instacart and Meta of overseeing platform launches and getting people to use the products, the kind of user acquisition at which Xbox has failed in recent years.

Sharma’s non-gaming credentials don’t mean she can’t do a good job at Xbox, but it will still be difficult to replace Phil Spencer, who is widely respected inside and outside Microsoft. He will be remembered for the impact he had on transforming Xbox more than a decade ago. Xbox could have easily died after the Xbox One debacle, but Spencer made transformative decisions that benefited the entire gaming industry.

Xbox has led the way in consumer-friendly decisions such as cross-play, or allowing consumers to purchase a game once and play it across both PC and console. Under Spencer’s watch, Game Pass has also forced competitors to offer similar subscription services.

Spencer is also leaving at a time when the Xbox Series S/X generation has failed to make a dent in Sony’s PlayStation sales and during a period of turmoil in the gaming industry and within Xbox. Layoffs and studio closures have plagued the Xbox division following the Activision Blizzard acquisition, and there are big questions about Microsoft’s gaming acquisitions, the side effects of its Game Pass push, and the future of the Xbox console itself. Spencer won’t be here to answer to them anymore.

Sharma now has the opportunity to define the next 25 years of Xbox, and we’re about to see if she can turn around Xbox and implement a clearer strategy. “The next 25 years will belong to the teams that have the audacity to build something surprising, something no one else wants to try, and have the patience to pull it off,” says Sharma. “We’ve done it before, and I’m here to help us do it again.”

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