The Phil Spencer, Sarah Bond, and Xbox Crisis Explained

It has been a shocking week in the video game industry. Earlier this week, Sony announced it will be shutting down Bluepoint Games, a respected developer best known for their quality remakes and remasters, like the PlayStation 5 remake of Demon's Souls, in March. The reason for the shutdown was "Rising development costs, slowed industry growth, changing player behavior, and broader economic headwinds are making it harder to build games sustainably," as released in a statement to Kotaku and other media outlets.

This past Friday, Phil Spencer, CEO of Microsoft Gaming, announced he was leaving the company. Immediately after this news, Sarah Bond, president of Xbox, also stepped down, a surprise given that some saw her as Spencer's heir apparent. Effective immediately, Asha Sharma, became the new head of Microsoft Gaming.

This shakeup has left Xbox fans with a lot of confusion and worry regarding the departure of Xbox's leadership, the future of the brand, and the circumstances surrounding their exits. Here is all the information we know, clarified.

Phil Spencer Retires After 39 Years

Contrary to what many assumed was a quiet firing, Spencer later clarified on Friday that he was not fired and that he had planned to retire months ago. Speaking to IGN, Spencer revealed an internal memo that he had sent to Microsoft employees about his departure.

"Last fall, I shared with Satya 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. 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," wrote Spencer.

New Microsoft Gaming CEO Sharma also clarified in the company's announcement post that she had been in discussions with Spencer about a transition after he expressed a desire to step down. "Last year, Phil Spencer made the decision to retire from the company, and since then we’ve been talking about succession planning,” wrote Sharma.

Spencer's retirement will begin on February 23, 2026. Spencer was not fired or forced out of the company; he left of his own desire to begin a new chapter.

Sarah Bond Resigns as President of Xbox

In conjunction with Spencer's retirement, Microsoft also announced that Bond had decided to leave the company as part of the transition. Sharma wrote, "As part of this transition, Sarah Bond has decided to leave Microsoft to begin a new chapter. 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. I’m grateful for her partnership and the impact she’s had, and I wish her the very best in what comes next."

Later, Bond posted a personal departure message on LinkedIn, which was part of the internal memo sent to Microsoft employees. Bond clarified she would be part of the transition and would support Sharma, writing, "I’ve decided this is the right time for me to take my next step, both personally and professionally. We’re living through a transformative technological era that will shape the next generation of our industry, and I’m energized by what’s ahead. This moment also presents a unique opportunity for fresh eyes and new leadership to guide the team into its next chapter. 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.

There have been no official reports, documentation, or communication that suggests Bond was asked to resign or fired.

Asha Sharma Takes Over Microsoft Gaming

Sharma's official title will be Executive Vice President and CEO of Microsoft Gaming. Additionally, Matt Booty will become Executive Vice President and Chief Content Officer, reporting to Sharma.

Before becoming the boss of Xbox, Sharma was the president of CoreAI Product at Microsoft, according to her personal LinkedIn page.

Sharma wrote a post on LinkedIn to announce her new role. "Today I am honored to step into the role of CEO of Microsoft Gaming. Over the last 25 years, Xbox has grown to reach more than 500 million monthly active players around the world, including nearly 40 studios across Activision, Bethesda, Blizzard, King, Mojang, and Xbox Game Studios. Together, these teams care for some of the most enduring and beloved franchises in entertainment, including Halo, Minecraft, The Elder Scrolls, Call of Duty, World of Warcraft, Diablo, Candy Crush, and Fallout. Our reach today spans devices, geographies, and generations. Thanks to Phil Spencer for his leadership, and to every studio, platform, and operations team that built this foundation. I want to congratulate Matt Booty on his promotion to Chief Content Officer. Matt’s career reflects a lifelong commitment to games and to the people who make them. I am looking forward to partnering with and learning from him," wrote Sharma.

Sharma also took time in the Microsoft announcement blog post to make three pretty large commitments to Xbox fans: "great games," "the return of Xbox," and "future of play."

Why Some Xbox Fans Are Concerned

When the leadership change announcement was made, especially on the heels of Sony's closure of Bluepoint Games, some Xbox fans took notice of Sharma's LinkedIn resume and noticed that, at first glance, she doesn't appear to have any experience in the video game industry. She, however, does have a lot of experience in AI, something that has become extremely controversial in the industry, and has either directly or indirectly led to mass layoffs and decline in quality of games, in some gamers' eyes.

Xbox seems to be in a brand crisis at the moment. The Xbox ROG Ally and Xbox ROG Ally X handheld releases generated some controversy for their prices and competition from Valve's Steam Deck and the Nintendo Switch 2. Additionally, Xbox increased the price of Xbox Game Pass Ultimate earlier this year to $29.99 a month.

Sharma has made some promises to Xbox fans, and with some fans feeling Xbox was already on a sinking ship, it will be up to her and Booty to turn it around back to port and patch it up.