New Report Details the Reasons for Xbox’s Recent Reorg

Microsoft announced a major reorg at Xbox on Friday afternoon, with the unexpected departures of both Microsoft Gaming CEO Phil Spencer and Xbox President Sarah Bond. Phil Spencer is retiring after 38 years at the company, and he’s replaced by Asha Sharma, who previously served as Microsoft’s president of Core AI. Sarah Bond, however, is leaving the company, and the exec wasn’t mentioned at all in the internal memos from Microsoft CEO Satya Nadella and Matt Booty, the company’s new Chief Content Officer.

We had to wait a couple of hours to see Bond publish her own departure message on LinkedIn, in which she thanked Phil Spencer as well as Satya Nadella for their leadership. Bond also said that during the transition period, she will work as a “special advisor” to the new CEO of Microsoft Gaming, and Spencer announced a similar advisory role through the summer.

The fact that Microsoft dropped the bombshell on a late Friday afternoon was surprising on its own, except if Microsoft wanted to avoid killing its stock price. However, that’s not what happened, as The Verge’s Tom Warren revealed today in a lengthy report about the internal shakeup.

According to Warren’s sources, Microsoft was initially planning to announce the reorg today, but it was forced to do it on Friday after the information had leaked and IGN was getting ready to publish it. Warren also revealed why Sarah Bond, who many people saw as Phil Spencer’s natural successor, didn’t ultimately get the Microsoft Gaming CEO job.

As a longtime gamer with an affable personality, Spencer still enjoys a great reputation in the gaming industry, even though Xbox consoles cratered during his tenure. In recent years, Bond became one of the main public faces of Xbox, and she was reportedly instrumental in getting Microsoft’s $68 billion acquisition of Activision Blizzard greenlit by regulators around the world.

According to Warren, Bond was behind the “Xbox everywhere” strategy that pretty much told consumers that they no longer needed to buy an Xbox, as Xbox games were now available on other platforms, including the cloud and rival consoles. However, this new approach was met with resistance from some Xbox employees, and the strategy also didn’t really help Xbox gain significant mindshare.

“I understand that Bond’s strategy had been failing internally and been questioned multiple times. Bond had tried to push mobile and cloud over console, to reach potentially millions more Xbox customers, but the result has been a classic case of chasing tomorrow’s customers by neglecting today’s,” Warren wrote.

According to the report, the internal sentiment towards Bond’s management style was quite ambivalent. “I’ve heard from multiple sources that Bond has been tough to work with, and built a team structure that meant if you didn’t follow the vision or questioned it, you were out. Most have praised her ability to strike partnerships with companies and developers, though,” Warren explained.

If Bond’s “Xbox Everywhere” strategy received some criticism, she also failed to ship the Xbox mobile gaming store that was originally planned to launch in July 2024. While Microsoft is no longer discussing this mobile game store, the Xbox mobile app added support for Xbox games and Game Pass purchases last year, which is better than nothing.

With Spencer and Bond now out of the picture, the new head of Microsoft Gaming will have the difficult task of redefining what Xbox wants to be as the brand is about to celebrate its 25th anniversary. In her memo to employees, Asha Sharma said that she wanted to focus on three things: “great games,” the “return of Xbox,” and the “future of play.” As a former Microsoft AI exec, she also emphasized that Microsoft “will not chase short-term efficiency or flood our ecosystem with soulless AI slop.”

We don’t know yet if Sharma plans to tweak Microsoft’s next-gen Xbox plans or make some changes to Xbox services like Game Pass. Recent reports suggested that the next Xbox console will run Windows and support third-party stores like Steam, but it may also be much more expensive than current-gen consoles. It’s hard to be an Xbox fan when Microsoft is selling an $800 Xbox Series X and Xbox Game Pass Ultimate costs $29.99/month, but Sharma appears willing to shake things up.

“I want to return to the renegade spirit that built Xbox in the first place. It will require us to relentlessly question everything, revisit processes, protect what works, and be brave enough to change what does not,” the exec said on Friday.