Xbox shakeup: Phil Spencer and Sarah Bond are leaving Microsoft

The last few years of Xbox have been expensive. Under Phil Spencer’s leadership, Microsoft has spent billions of dollars in an attempt to build an ambitious future for gaming that looks a lot like Netflix. And while its subscription service Game Pass started out as a good deal for gamers (although now not so much), that spending spree has led to catastrophic layoffs, studio closures, and confused and inconsistent messaging about what Xbox actually stands for. And with Spencer set to retire as new leadership takes charge, the future of Microsoft’s gaming efforts looks increasingly unclear.

Spencer announced his retirement last week, after over a decade leading the Xbox division and nearly four at Microsoft. He’ll be replaced as CEO by Asha Sharma, formerly president of Microsoft’s CoreAI Product, while Xbox Game Studios boss Matt Booty has been promoted to EVP and CCO. As part of the restructuring, Xbox president Sarah Bond will be leaving Microsoft. One of Sharma’s commitments, she wrote in a memo, is “the return of Xbox.” But given the brand’s uncertain status right now following Spencer’s tenure, what that actually means is anybody’s guess.

Xbox fans had been anticipating the retirement of Microsoft Gaming CEO Phil Spencer for years, but what most hadn’t expected was the departure of Xbox president Sarah Bond too. For many outside the company, Bond seemed like Spencer’s natural successor, a deputy of sorts.

Microsoft CEO Satya Nadella and Microsoft CFO Amy Hood clearly didn’t agree.

Xbox has new leaders today, now that Phil Spencer and Sarah Bond are out — and you’d be forgiven for assuming that means yet another round of layoffs and shuttered studios, especially one day after Sony jettisoned a beloved developer.

Not yet, it seems. “To be clear, there are no organizational changes underway for our studios,” Microsoft Gaming EVP Matt Booty wrote in his memo today. It’s a little buried under everything else Microsoft’s outgoing and incoming gaming CEOs are saying, so figure it’s worth dragging to the surface!

Microsoft gaming boss Phil Spencer has just announced he’s leaving the company after 12 years leading Xbox and nearly 40 at Microsoft in total. His replacement: Asha Sharma, formerly head of development for Microsoft’s AI enterprise teams. Before that, she was COO of Instacart for three years, and spent four at Meta in charge of the company’s messaging apps.

What will Sharma do with Xbox? Read for yourself in her first internal memo, which we’ve printed in full below.

Xbox chief Phil Spencer has just announced to employees that he’s leaving Microsoft after 38 years. In a memo entitled “A new chapter for Microsoft Gaming,” Spencer reveals to Xbox employees that he made the decision to retire from Microsoft last fall.

He also reveals Xbox president Sarah Bond is leaving Microsoft, triggering a big change in management at Xbox. Asha Sharma, currently the president of CoreAI product at Microsoft, is stepping into the Microsoft Gaming CEO role, reporting directly to Microsoft CEO Satya Nadella.

Xbox chief Phil Spencer is leaving Microsoft after nearly 40 years at the software giant. Xbox president Sarah Bond is also leaving Microsoft, in what is a major shake-up to the management of Xbox and Microsoft’s gaming efforts. Asha Sharma, currently president of CoreAI product, is taking over as CEO of Microsoft Gaming.

Microsoft CEO Satya Nadella announced Phil Spencer’s retirement in a memo to all Microsoft employees today. “Last year, Phil Spencer made the decision to retire from the company, and since then we’ve been talking about succession planning,” says Nadella. “I want to thank Phil for his extraordinary leadership and partnership. Over 38 years at Microsoft, including 12 years leading Gaming, Phil helped transform what we do and how we do it.”

Sarah Bond, the president and COO of Xbox, is leaving the organization, along with CEO of Microsoft Gaming Phil Spencer. Her departure was announced at the same time as Spencer’s, with Asha Sharma moving into the EVP and CEO of Gaming role and Matt Booty being promoted to EVP and chief content officer. In a note to employees that she shared on LinkedIn late Friday, Bond writes that she will “remain on as a Special Advisor to Asha to help ensure a smooth transition and set the organization up for continued success.”

Microsoft is making the changes as it is undergoing some dramatic shifts to its Xbox plans, including bringing Windows and Xbox closer together to empower devices like the Xbox Ally handheld instead of relying entirely on first-party Xbox hardware. The company is also navigating increased pressures on the Xbox business, major layoffs, and hits to Xbox studios.