Huge shakeup at Xbox as CEO and president both leave

Xbox is making big changes at the very top of the corporate ladder.

IGN reported the bombshell news on Friday afternoon that Microsoft Gaming CEO Phil Spencer is retiring, effective on Monday, Feb. 23. On top of that, Xbox president Sarah Bond, who recently confirmed some important details about the next Xbox console in an interview with Mashable, has also resigned from the company. Spencer had been a top dog at Xbox since the mid-2010s, overseeing the brand's shift into a subscription-based business with Game Pass. Bond, meanwhile, was widely seen as Spencer's heir apparent at the company, frequently serving as a public face for Xbox in recent years.

Spencer's replacement at the top of the Xbox division will be Asha Sharma, who currently leads Microsoft's CoreAI product and appears to have little experience in the gaming business. Sharma was previously an executive at Meta and Instacart, per IGN. She will work closely with Xbox Game Studios head Matt Booty, who has been promoted to Chief Content Officer. In an email to staff members, Spencer said this had been in the works since last fall.

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"Last fall, I shared with [Microsoft CEO Satya Nadella] that I was thinking about stepping back and starting the next chapter of my life. From that moment, we aligned on approaching this transition with intention, ensuring stability, and strengthening the foundation we’ve built," Spencer wrote, per IGN. "Xbox has always been more than a business. It’s a vibrant community of players, creators, and teams who care deeply about what we build and how we build it. And it deserves a thoughtful, deliberate plan for the road ahead."

Aside from the pivot to sustaining Xbox through Game Pass subscriptions, Spencer will also be largely remembered for overseeing the division as it went on a wild acquisition spree over the last several years. Xbox's blockbuster purchases of Bethesda and Activision occurred under Spencer's watch, giving Microsoft an astoundingly large portfolio of franchises to work with, at least in theory.

There will surely be plenty of reporting in the days and weeks ahead on what this all means for Xbox, but given the brand's general trajectory over the past year or so, there will be a lot of speculation that this is not a positive development. Xbox console sales have been faltering for a while now, while first-party software titles such as Avowed and The Outer Worlds 2 did not meet sales expectations last year. Beyond that, at least some portion of the gaming audience has disavowed the Xbox brand due to its recent inclusion on the BDS boycott list as a result of Microsoft's ongoing tech partnership with the Israeli military.

In other words, Xbox has been on a financial and reputational downturn for some time now. It will now be up to Sharma and Booty to correct that.