This article was originally published on February 27, 2026 - read the full issue

By Patrick Garratt

Phil Spencer and Sarah Bond, two of the most prominent execs in today's console market, are leaving Xbox. Spencer is to be replaced by Asha Sharma (previously an AI executive at Microsoft) as the head of Microsoft Gaming, while Matt Booty, who has been working on games at the company for over 15 years, will now lead content, including management of Xbox Game Studios, Bethesda and Activision Blizzard.

Microsoft made the announcement late last Friday night, a classic tactic in burying bad news. The industry's reaction has largely seen it thus.

While these changes indicate the imminent direction of Microsoft Gaming, an operation that accrued almost $24 billion in revenues last year, some went further in their assessment of the new appointments: this is, according to Xbox co-founder Seamus Blackley, the beginning of the end.

"Xbox, like a lot of businesses that aren't the core AI business, is being sunsetted," he said in an interview with GamesBeat.

"They don't say that, but that's what's happening. I expect that the new CEO, Asha Sharma, her job is going to be as a palliative care doctor who slides Xbox gently into the night."

Ex-Reddit director Vin Sathyamoorthy assessed Blackley's view, noting that the reality of Microsoft's aspirations for gaming is more nuanced.

"Xbox is hard to shut down," he said. "It's a 24-year brand and Microsoft spent $69 billion acquiring Activision Blizzard. The gaming industry – publishers, developers, fans – would come after Microsoft, and the narrative compresses easily into 'big tech doesn't care about creators'. That's not a battle Nadella wants to wage publicly."

Sathyamoorthy condeded, though, that Sharma's appointment is very likely to have been heavily influenced by the general direction of Microsoft towards AI integration.

"The big bet demands full attention," he said. "Microsoft Gaming does around $24 billion in a $282 billion company. Azure alone surpassed $75 billion and grew 34 per cent last year – 39 per cent last quarter – inside a cloud and AI segment doing $106 billion. Nadella committed over $80 billion to AI infrastructure in fiscal 2025. This is the bet Microsoft has to win. Having limited distractions would make sense."

Others were a little more blunt about how they viewed Spencer and Bond's replacement.

"'If I had asked people what they wanted, they would have said faster horses' is the kind of quote beloved by those trying to redefine Xbox," said consultant Tadhg Kelly. "But some markets only want faster horses. This is why appointing an AI leader to run Xbox is quite likely to fail."

The 'Model T' being introduced by Microsoft with these changes is, of course, AI. Innovation in gaming, Kelly added, should not be reinvention.

"Where Xbox has been going wrong for many years is believing there's a untapped or unaddressed gaming segment that can be turned on with innovation on services," he said.

"That, like software, there's a way to redefine the horse. But there isn't. It's been tried and tried and tried and tried, not just by Microsoft. At every turn the gamers respond that they just really really REALLY like their faster horses and have zero interest in motor cars."

The assessments, en bloc, were largely negative, with a general focus on Sharma's lack of experience with the videogame market.

"She has no gaming credibility," said consultant Eric Kress. "No track record as a gamer, no relationships in the development community, no instinct for game culture. She's 36 years old with barely two years at Microsoft under an AI title that frankly means nothing in the context of running the world's largest gaming division.

"And she's going from managing roughly 3,000 employees at Instacart to overseeing 10,000–15,000 people, a 3–5x jump in [organisation] size, in an industry she has no prior experience in."

Kress noted the similarities between the current situation at Xbox and former Xbox chief Don Mattrick's hire of Yusuf Mehdi from MSN/Hotmail, a team-up that delivered the disaster that was Xbox One.

Blackley shared similar sentiments.

"Some people coming from outside businesses succeed in games and others just hit the wall, because it's a content business," he.

"They're not ready for that. They think it's a compute business, or they think it's a rendering business, or they think it's a software business. Games is none of those things.

"Her statement, or the statement that was written for her in the press release, saying that she was looking forward to seeing what makes games work or something like that, was hilarious. It reminded me of that meme: 'Hello, fellow kids!' I'll now figure out what's interesting about games! Oh, boy. Wow."

Not everyone, however, shared the view that Phil Spencer's famous love of all things gaming is a prerequisite for heading Microsoft's operation.

"I've lost count of the number of posts and thinkpieces I saw over the weekend debating whether you need to be a 'gamer' to lead a games division," said entertainment lawyer Simon Pullman.

"I think there are degrees here. Across entertainment, there has been a transition over the last 50 years from creative companies being led by creatives, to being led by MBAs and/or tech people. Can it work sometimes? Sure – but only if they actually understand their audience and tailor their strategy to what consumer actually want."

Ed Fries, too, was far less apocalyptic in his assessment of the news. Fries, likes Blackley, was one of the original advocates for Xbox at Microsoft and a key part of the original launch team.

"I'm not worried that Asha doesn't come with game experience," he said, speaking to GamesBeat.

"I think that's going to be OK. Maybe that's a concern some people have had. I heard a little about her. She was described to me as bright and capable. I heard an anecdote about her when she was an intern working for someone, a while ago. People at the company all decided they were going to work for her someday. She was that good."

And while much of the reaction focused on Sharma's appointment, there were some heartfelt goodbyes from Spencer and Bond's colleagues, such as this from James Lewis, director at the ID@Xbox Developer Acceleration Program.

"Phil Spencer has always made me proud to be a part of team Xbox. His leadership, humility, passion for games and players reminded me why I love this industry," he said, also noting Bond's presence and leadership reminded him that "our lived experiences, cultures, and perspectives were not liabilities to hide, but were instead strengths that allowed us to advocate for and reach more people."

He added: "Thank you both for setting great examples for how to lead with humility and empathy while also living your values."

This article was originally published on February 27, 2026 - read the full issue