During Phil Spencer’s tenure as the CEO of Microsoft Gaming, he brought dozens of the games industry’s best developers and most beloved franchises under a single roof. As a result, his successor Asha Sharma is in a unique position where she really can succeed in the video game business, despite her inexperience in the field, without really trying.
The surprising departures of Phil Spencer and Sarah Bond from Xbox marks the end of a chaotic week for the global video game industry, as well as a new period of uncertainty for Microsoft’s already chaotic gaming division.
At first glance, the news doesn’t appear to be good. Observers have noted that Sarah Bond was posting on LinkedIn on Xbox’s behalf only a few hours before the story broke that she’d resigned. While Spencer has announced publicly that his retirement has been months in the making, Bond’s resignation initially seemed more sudden. (Bond has since posted on LinkedIn that this transition has been in the works for a while.)
Another point of cynicism comes from Spencer’s planned replacement. Sharma, the newly appointed CEO of Microsoft Gaming, is a relatively new face at Microsoft with no previous experience in the games industry.
She’s moving over to Xbox from a previous stint as a president at Microsoft’s CoreAI division, which comes at the same time as Microsoft is already drawing fire — from me, if no one else — for trying to wedge its Copilot LLM into every individual facet of its product lineup. Putting one of its AI leaders in charge of its games division sounds like an attempt to take another step in that direction.
In her defense, and to her credit, Sharma does appear to have anticipated that initial criticism, writing in an email to the Microsoft Gaming team: “…we will not chase short-term efficiency or flood our ecosystem with soulless AI slop. Games are and always will be art, crafted by humans, and created with the most innovative technology provided by us.”
Sharma’s arrival as CEO comes on the heels of last October’s report that Microsoft’s video game division has spent the last two years working to meet deeply unrealistic profit margins, as mandated by Microsoft CFO Amy Hood. That revelation served to at least partially explain some of the strange decisions Xbox was making, such as waves of layoffs, sudden studio closures, and abruptly canceling highly anticipated projects such as the Initiative’s reboot of Perfect Dark.
With that news in mind, it’s reasonable to wonder if today’s news is the beginning of the end for Xbox. Microsoft has seemingly set the division up to fail for at least the last two years, which has led to rumors that executives are simply looking for an excuse to sunset the department.
It’d even be a good time to jump out of the hardware game. Bond in particular had already been hyping up the next version of the Xbox, with last year’s portable ROG Xbox Ally as a sort of effective sneak preview thereof. However, recent memory shortages created by data center demand are currently changing every hardware manufacturer’s plans. If Microsoft were to decide to postpone or even cancel the next Xbox, which could’ve arrived as soon as next year, the current cost of memory would be a solid excuse. Also of note: Xbox hardware revenue fell 32% in Microsoft’s most recent quarter.
On the other hand, Sharma is counterbalanced by the promotion of Xbox’s Matt Booty to chief content officer. As the former head of Xbox Game Studios, Booty is one of the last big insiders left at Microsoft’s gaming division. In a perfect world, he’d form a good counterbalance to Sharma’s inexperience with the industry.
Further, while Xbox has significant and ongoing PR issues, it’s not doing as poorly as many of its detractors would prefer to believe. Xbox is currently saddled with a bad reputation based upon its seemingly permanent third-place status in the console market; its recent tendency to suddenly fire thousands of people while abruptly shutting down its subsidiaries; and there’s at least one significant organized boycott against the company. That all adds up, which has left the enthusiast end of the games industry convinced that Xbox is on the verge of collapse.
That aside, however, Xbox has shown some real signs of life in the last year. 2025 saw Xbox Game Studios release original IP like Avowed, South of Midnight, and Keeper, alongside franchise entries such as Doom: The Dark Ages, Ninja Gaiden 4, The Outer Worlds 2, Grounded 2, and a new Call of Duty. Many of these games were at least critically successful, and a few even sold well.
Xbox’s 2026 lineup currently includes the long-awaited reboot of the Fable series, an upcoming World of Warcraft expansion, a new Forza Horizon racing game, another Gears of War, and Halo: Campaign Evolved.
Xbox’s problem has never been a lack of in-house talent or not having any popular franchises. For the last few years, its biggest issue has been instability. Even its internal studios that produced popular and successful games, such as Tango Gameworks (Hi-Fi Rush), were potentially on the chopping block. If your potential reward for doing well was still getting laid off, what’s your incentive to perform?
As a result, the best move that Sharma could make as CEO, at least in the short term, might be to do nothing. In her memo to staff, the former Instacart and Meta exec laid out a big vision, noting that “we will invent new business models and new ways to play,” and that the company must “relentlessly question everything, revisit processes, protect what works, and be brave enough to change what does not.”
But perhaps the right move, at least initially, is to lay low. If Sharma and Microsoft are simply willing and able to let their studios work, in their own time and at their own pace, without the imminent threat of another wave of layoffs, it could be the first step toward restoring some of Xbox’s tattered reputation.
