REDMOND, Wash. — In a significant shakeup at Microsoft’s gaming division, Sarah Bond, president and chief operating officer of Xbox, announced her departure from the company on Friday, alongside the exit of Phil Spencer, CEO of Microsoft Gaming. The moves come amid ongoing transformations in the Xbox business, including strategic shifts toward PC and cloud gaming, as well as recent layoffs and pressures on the division’s hardware initiatives. Bond, who has been a key figure in Xbox’s evolution since joining Microsoft in 2017, shared her decision in a heartfelt memo to employees, which she posted on LinkedIn.
Bond’s announcement coincides with the promotion of Asha Sharma to executive vice president and CEO of Gaming, while Matt Booty advances to executive vice president and chief content officer. In her memo, Bond expressed pride in the team’s accomplishments over the past eight-plus years, highlighting the rapid growth of PC and cloud gaming, progress on the next Xbox console, and the foundation laid for a more open gaming platform that spans multiple devices. “I’m incredibly proud of what we’ve built together over the past eight-plus years,” Bond wrote. “PC and cloud gaming are growing faster than ever, our next console is well underway, and together we’ve helped lay the foundation for a more open gaming platform that spans devices and reaches players around the world.”
The departures mark the end of an era for Xbox leadership. Bond joined Microsoft in 2017 as a corporate vice president focused on gaming partnerships and business development. She was elevated to president of Xbox in 2023, where she oversaw teams handling devices, player and creator experiences, strategy, and business planning. Spencer, who has led Microsoft Gaming since 2022 following the acquisition of Activision Blizzard, praised Bond’s contributions in an internal memo. “Sarah has been instrumental during a defining period for Xbox, shaping our platform strategy, expanding Game Pass and cloud gaming, supporting new hardware launches, and guiding some of the most significant moments in our history,” Spencer said. “I’m grateful for her partnership and the impact she’s had, and I wish her the very best in what comes next.”
Bond’s memo delved into the challenges faced during her tenure, particularly the 2022 announcement of Microsoft’s intent to acquire Activision Blizzard for $68.7 billion, a deal that closed in October 2023 after regulatory hurdles. She committed at the time to steering Xbox through this “critical period of change,” which included navigating antitrust scrutiny from regulators in the U.S., European Union, and United Kingdom. “Over the past four years, we’ve navigated that moment together and positioned the business for what comes next,” Bond wrote. “We took on some of the biggest challenges this organization has ever faced and did it as one team.”
Reflecting on her decision to leave, Bond described it as the right time for a personal and professional next step amid a “transformative technological era.” She emphasized the opportunity for new leadership, noting her recent interactions with Sharma. “I’ve had the privilege of spending time with Asha over the last few weeks as we’ve planned for this transition, and I’ve seen firsthand her deep commitment to our players, developers, and brand,” Bond said. “She brings deep technology and commerce experience, along with a strong track record of building and scaling platforms that the world uses. Xbox deserves this. I’m excited to see her lead this next chapter for our team.”
Bond will stay on as a special advisor to Sharma to facilitate a smooth handover and ensure the organization’s continued success. She also extended thanks to Spencer for his mentorship and to Microsoft CEO Satya Nadella for his support. “I want to thank Phil for his mentorship and friendship over the years,” she wrote. “He’s been a consistent champion of this business and the people who make it what it is, and I’ve learned a great deal from the way he leads through both opportunity and challenge.”
The leadership changes occur against a backdrop of strategic pivots at Xbox. Microsoft has been moving away from a heavy reliance on proprietary hardware, instead integrating Windows and Xbox ecosystems to support devices like the rumored Xbox Ally handheld. This shift aims to broaden accessibility in gaming, particularly as competitors like Sony and Nintendo dominate console sales. According to reports, these adjustments follow disappointing sales of the Xbox Series X and S, which launched in November 2020 and have struggled to match the PlayStation 5’s market share.
Additionally, Microsoft’s gaming division has faced substantial workforce reductions. In January 2024, the company laid off 1,900 employees from Activision Blizzard and Xbox teams, part of broader cost-cutting measures across the tech sector. Earlier waves of layoffs in 2023 affected hundreds at studios like Tango Gameworks and Arkane Austin, leading to studio closures and project cancellations. These events have drawn criticism from industry observers and employees, who argue they undermine morale during a period of innovation.
Spencer’s departure, announced concurrently with Bond’s, closes a chapter for the long-time Xbox executive. He assumed the CEO role for Microsoft Gaming in 2022 but has been with the company since 2008, rising through ranks in business development and studios. His tenure saw the expansion of Xbox Game Pass, which now boasts over 34 million subscribers as of early 2024, and the push into cloud gaming via Xbox Cloud Gaming. However, challenges persisted, including regulatory blocks on acquisitions like the attempted purchase of Activision Blizzard’s cloud streaming rights by other firms.
Industry analysts view the shakeup as a response to competitive pressures and internal reassessments. Microsoft’s gaming revenue grew 51% year-over-year in the fiscal quarter ending December 2023, largely due to the Activision deal, but hardware sales declined 31%. Sources close to the company, speaking on condition of anonymity, suggest the leadership transition could accelerate multi-platform strategies, potentially releasing more first-party titles on PlayStation and Nintendo Switch.
Asha Sharma, the incoming CEO, brings a background in technology and e-commerce from her time at PayPal and eBay, where she led product and engineering teams. Her appointment signals Microsoft’s intent to leverage commerce expertise in scaling gaming services. Matt Booty, promoted to chief content officer, has been with Xbox since 2007 and previously served as president of Game Studios, overseeing creative direction for titles like Halo and Forza.
Bond concluded her memo with a personal reflection, posing three guiding questions she used during her time at Microsoft: “Did I bring my best? Did I help someone else succeed? Did I do my best work?” She hoped the answers were affirmative for her team members and called her service a privilege. “It’s been a privilege to work alongside this team,” she wrote. “Always, Sarah.”
The broader implications for Xbox remain to be seen, but the changes underscore Microsoft’s adaptability in a dynamic industry. With cloud gaming projected to reach $20 billion globally by 2028, according to Newzoo research, the new leadership will need to balance innovation with profitability. Employees received the news via internal communications late Friday, with Bond’s LinkedIn post garnering thousands of reactions from industry peers expressing support and surprise.
As Microsoft navigates these transitions, attention turns to upcoming projects like the next-generation Xbox console, expected in 2028, and enhancements to Game Pass. Spencer’s memo indicated his own next steps would be announced soon, leaving room for speculation about his future role, possibly in advisory capacities or external ventures. For now, the gaming community watches closely as Xbox charts its course under fresh guidance.
This development follows a series of high-profile exits at Microsoft, including the departure of Xbox marketing head Aaron Greenberg in late 2023. It reflects the tech giant’s ongoing efforts to streamline operations amid economic uncertainties and evolving consumer habits in entertainment.