Phil Spencer, CEO of Microsoft Gaming, is retiring, Satya Nadella has announced. Asha Sharma, the President of Microsoft’s CoreAI division is taking over Spencer’s role, while Sarah Bond, the current President of Xbox, is resigning.
“I am long on gaming and its role at the center of our consumer ambition, and as we look ahead, I’m excited to share that Asha Sharma will become Executive Vice President and CEO, Microsoft Gaming, reporting to me,” Nadella says. “Over the last two years at Microsoft, and previously as Chief Operating Officer at Instacart and a Vice President at Meta, Asha has helped build and scale services that reach billions of people and support thriving consumer and developer ecosystems. She brings deep experience building and growing platforms, aligning business models to long-term value, and operating at global scale, which will be critical in leading our gaming business into its next era of growth.”
In a thread on X, Spencer shared his thoughts on Sharma’s new position. “I’m excited for [Asha Sharma] as she steps into the CEO role,” Spencer wrote. “She’s joining an incredible group of people; teams full of talent, heart, and a deep commitment to the players they serve. Watching her lean in with curiosity and a real desire to strengthen the foundation we’ve built gives me confidence that our Xbox communities will be well supported in the years ahead.”
Alongside Sharma, Matt Booty, the current head of Xbox Game Studios, is getting promoted to Chief Content Officer, and will report to Sharma. Sarah Bond, who like Spencer served as a public face for the Xbox brand and was assumed to be his successor, is leaving Microsoft to “begin a new chapter.” Bond has yet to make a public statement about her resignation.
Spencer joined Microsoft in 1988, and has worked on Xbox since at least 2001. He assumed responsibility for Microsoft’s gaming brand and its various studios and associated subscription products in 2013, before becoming an Executive VP of Gaming in 2017 and later CEO of Microsoft Gaming in 2022. Spencer’s biggest impact on Xbox will likely be remembered as the creation of Game Pass, Microsoft’s “Netflix for Games” and the wave of studio acquisitions Microsoft completed from 2018 to 2022, which included smaller studios like Double Fine and the massive $68.7 billion purchase of Activision Blizzard King.
While Microsoft has plenty of developers and IP to fall back on, it’s struggled to compete with the likes of Sony and Nintendo during the current console generation. Microsoft’s gaming division has gone through widespread layoffs, its revenue continued to fall throughout 2025 and it raised the prices of both its consoles and Game Pass Ultimate, which likely won’t help things going forward. Sharma is in many ways inheriting a broken-down car.
As far as her plans go, Sharma’s email to staff that was included in Nadella’s announcement is light on details. Sharma says she plans to continue developing “great games,” wants to “recommit” to core Xbox fans and “invent new business models and new ways to play.” Whether that’s enough to turn Xbox’s fortunes around remains to be seen.
Update, February 20, 4:52PM ET: Added statement from Phil Spencer shared on X.
A Call of Duty: Black Ops 6 campaign that looks like Mission: Impossible by way of an Adam Curtis documentary, a Gearsof War prequel that shows fans E-Day and the birth of the series’ iconic “Lancer” chainsaw gun, and a trailer that showed Perfect Dark isn’t just still alive, it’s potentially thriving. Microsoft’s 2024 summer showcase was the best that Xbox has looked going back to the Xbox One years. But it’s come at a huge price, and one the company doesn’t seem ready to acknowledge publicly.
Thank You, PS Plus, For Making My Backlog Even Bigger
Insiders had been hyping the showcase for days, in part due to the fact that its full list of reveals and announcements had already leaked to some in the media and beyond. Fans have been burned before, expecting Xbox to finally turn a corner only to have the football pulled once again and realize the platform is still in another one of its inescapable “rebuilding” years. The proof is always in the games themselves, and how successful they are can only really be determined once they get into players’ hands. For now, though, the showcase delivered.
There was over sixty minutes of games big and small, offering everything from zombie survival to nostalgic teen hangout, punctuated by massive first-party franchises and third-party teases. If you own an Xbox Series X/S there will be plenty to play this year and next. Xbox game studios head Matt Booty’s perennial promise for a steady cadence of quarterly Xbox games worth showing up for might finally come true. The only thing missing from the event was any accountability for what, and who, Microsoft has sacrificed to get here.
It’s been just over a month since the company announced it’s shutting down three studios and reshuffling a fourth. One of the casualties, Tango Gameworks, and its 2023 hit Hi-Fi Rush, seemed to symbolize the best of Xbox in the Game Pass era: a hyper-stylized passion project from a newer team that wowed critics and won awards and wouldn’t have been possible without the “let a thousand flowers bloom” strategy behind the platform’s pivot to a Netflix-like subscription library. In a crushing reversal, however, the deep-pocketed tech giant cut the team, along with storied immersive sim makers Arkane Austin and others. According to internal comments from Booty and the head of parent company Zenimax, there just wasn’t enough bandwidth for one of the three most valuable companies in the world to manage so many studios.
The bad news and bullshit explanation might not have gone down like a lead balloon if Microsoft hadn’t announced mass layoffs just months earlier across several departments, including newly acquired Activision Blizzard. The cuts hit everyone from the Overwatch 2 team to Call of Duty makers Sledgehammer Games, and included the cancellation of Odyssey, a survival crafting fantasy game that might have become the first new franchise from Blizzard in nearly a decade. Microsoft spent $69 billion on the acquisition, Microsoft Gaming CEO Phil Spencer toured the Activision Blizzard King offices shortly after the deal was finalized last fall, and then in early 2024 the mask came off.
Microsoft Gaming CEO Phil Spencer blamed the heel turn on a combination of investor pressure and the stagnation of the console gaming market in interviews with Game File and Polygon. In other words: capitalism. But the complete closure of Tango Gameworks, originally founded by Resident Evil director Shinji Mikami to train a new generation of creatives, seemed especially capricious. The Xbox team didn’t mention the developers it’s laid off and their contributions in its remarks to a live audience ahead of the showcase today, or during the pre-recorded event itself. (Even after learning its fate, Arkane Austin worked hard to push out Redfall’s much-needed final update.)
Instead, Spencer opened the showcase by promoting Black Ops 6 and the company’s desire to bring one of the most popular franchises to even more players through the power of a $17-a-month subscription. It maybe wasn’t surprising given the billions Microsoft paid to acquire the series, but the choice to open the show this way underscored the new reality of an Xbox brand that now needs to make a return worthy of all of those investments. “I haven’t been talking publicly about this, because right now is the time for us to focus on the team and the individuals,” Spencer told IGN later in the day, away from the hundreds of thousands of fans tunning into the showcase.
He continued:
It’s obviously a decision that’s very hard on them, and I want to make sure through severance and other things that we’re doing the right thing for the individuals on the team. It’s not about my PR, it’s not about Xbox PR. It’s about those teams. In the end, I’ve said over and over, I have to run a sustainable business inside the company and grow, and that means sometimes I have to make hard decisions that frankly are not decisions I love, but decisions that somebody needs to go make.
The showcase, meanwhile, didn’t even clear the bar set days prior by Geoff Keighley at the Game Awards host’s own showcase. Xbox president Sarah Bond, who responded with corpo word salad when asked about studio closures last month, closed out the Xbox showcase by pointing to the future instead of dwelling on the recent past. “It’s our mission to make Xbox the best place to play, by including our own studios’ games on Game Pass at launch, by bringing your games into the future with our commitment to game preservation, by pushing the boundaries in our future hardware, and to empower you to play your games wherever you want on Xbox console, PC, and cloud,” she said. “This is what defines Xbox today and in the future, and we’re hard at work on the next generation.”
It was a commitment aimed at reassuring fans still recovering from the shock of the brand’s recent pivots. But the future is built on the past, and every shiny new Xbox game now comes with the question of what will happen to the teams Microsoft has purchased or partnered with, once it no longer feels like they serve its bottom line.
Update 6/9/2024 9:10 p.m. ET: Added comments from Spencer’s post-show interview with IGN.
It’s the middle of May 2024 and that means we’re nearly halfway through the year. What has this year been like in video game news? Tons of layoffs (sad), lots of new games (glad), and some weird outliers, as usual. This week, we saw set photos and official shots from The Last of Us season two, dove back into the GameStop stock market, and asked the dude who nuked Phil Spencer in Fallout 76 about his motivations. Click through for all of this week’s best breaking news.
Earlier this week, Xbox announced that it would be shuttering several studios it had attained as part of its $7.5 billion purchase of Bethesda, including Arkane Austin, Tango Gameworks, Alpha Dog Games, and Roundhouse Studios, the last of which is being absorbed into another team. Collectively, the studios’ produced games like Dishonored, Prey, Redfall, Mighty Doom, Hi-Fi Rush, and more. These studios, and some of the more innovative titles that they developed, seemed at one point to be the future of Xbox’s floundering brand. After a downturn in many of Xbox’s large key franchises due to mismanagement, the shifting priorities of its audience, and the Xbox’s dwindling image across the world, titles like the ones these teams were developing seemed like the start of a promising new era for Xbox, one that might be marked by more creative, sustainably made games that weren’t designed to bleed its audience dry. – Moises Taveras Read More
After shutting down multiple Bethesda studios, Xbox and Bethesda leadership held a town hall meeting with staff to discuss the closures, explaining that the company’s studios had been spread too thin and that it wanted to focus on fewer projects moving forward.
Thank You, PS Plus, For Making My Backlog Even Bigger
On May 7, Xbox announced that it was closing three studios—Tango Gameworks (Hi-Fi Rush), Arkane Austin (Redfall), and Alpha Dog Games (Mighty Doom)—with a fourth support studio, Roundhouse Studios, being absorbed by the team behind Elder Scrolls Online. According to a new report, on May 8, in the aftermath of these surprising shutdowns, Xbox President Matt Booty and Zenimax head Jill Braff held a large meeting with staff and laid out the reasoning behind the cuts.
As reported by Bloomberg, during the meeting Booty praised Hi-Fi Rush, but wouldn’t go into specific details on why the studio behind the colorful action game had been shut down.
Speaking more broadly about the closings, Booty reportedly explained that Xbox and Bethesda’s studios had become spread too thin, like “peanut butter on bread,” and that team leaders felt understaffed. The idea being that by closing studios, Xbox would free up resources elsewhere within the company. Booty also told staff at the meeting that Akrane Austin’s closing had nothing to do with Redfallflopping with fans and critics.
Reportedly both Tango and Arkane Austin had pitched games to work on next, including a Hi-Fi Rush sequel and possibly a new Dishonored or similar single-player immersive sim-like game. Those likely won’t happen.
Braff allegedly said that she hoped the closing of some studios would allow Bethesda/Zenimax to focus on fewer projects in the future.
“It’s hard to support nine studios all across the world with a lean central team with an ever-growing plate of things to do,” she said, according to a recording Bloomberg reviewed. “I think we were about to topple over.”
Tango and Arkane were trying to hire more people while pitching new games, and both Braff and Booty reportedly suggested that the long, expensive road those teams faced before being able to release something new was the main reason for closing the studios, implying that it was just bad timing as Microsoft looks to trim down costs and overhead. It’s reported that more cuts are likely for Xbox, according to people who spoke to Bloomberg.
It’s also reported that ever since the massive $69 billion Activision Blizzard acquisition in 2023, Microsoft leaders have been ramping up their scrutiny of the Xbox division. The Verge reported on Wednesday that executives at Microsoft and Xbox had discussed not adding Call of Duty games to Game Pass, and raising the price of Game Pass Ultimate. However, nothing is concrete yet.
Microsoft’s leaders taking a bigger interest in Xbox might help explain why Booty and others are looking to cut costs. Either way, it’s likely more folks at Xbox will lose their jobs in the future.
One of the worst years for cancellations, cuts, and closures in the history of the video game industry has just claimed its next victims, including Arkane Austin and Tango Gameworks. Developers and fans alike are in disbelief. “Great teams are sunsetting before our eyes again, and it’s a fucking gut stab,” wrote Dinga Bakaba, director at Arkane Austin sister-studio, Arkane Lyon.
Why The Hot New Redfall Gameplay Trailer Left Us Feeling Cold
Set up in 2006, Arkane Austin helped develop the acclaimed 2012 whale-oil-punk immersive sim Dishonored, before leading development on 2017’s haunting sci-fi shooter Prey. Tango Gameworks, meanwhile, was founded in 2010 and is best known for making the Evil Within series of survival horrorgames, before bestowing a collective breath of fresh air on the video game industry last year with the colorful rhythm hack and slash platformer Hi-Fi Rush. Microsoft shut down both studios today, as well as other Bethesda subsidiaries Roundhouse Games and Alpha Dog Games, citing a need to focus on “high-impact” “priority games.”
“This is absolutely terrible,” tweeted Bakaba, co-creative director at the remaining Arkane studio, in the wake of the news. “Permission to be human: to any executive reading this, friendly reminder that video games are an entertainment/cultural industry, and your business as a corporation is to take care of your artists/entertainers and help them create value for you.”
The Deathloop co-director at the Microsoft-owned studio continued:
Don’t throw us into gold fever gambits, don’t use us as strawmen for miscalculations/blind spots, don’t make our work environments darwinist jungles. You say we make you proud when we make a good game. Make us proud when times are tough. We know you can, we seen it before.
For now, great teams are sunsetting before our eyes again, and it’s a fucking gut stab. Lyon is safe, but please be tactful and discerning about all this, and respect affected folks’ voice and leave it room to be heard, it’s their story to tell, their feelings to express.
Inside baseball, but if I read ‘immersive sim curse’ from the community, especially from a fellow dev, I swear to God… Please, let’s talk about the *real* challenges instead of rehashing irrational anxieties of the past. Even more inside baseball, but with a very, very wide range, as a wise and sorely missed man said: “Please Stop.”
Harvey Smith, co-director on Redfall at Arkane Austin, called today’s new “terrible,” adding that the team there had been through a lot together. Bloomberg previously reported that the vampire shooter’s troubled development grew out of a push by top Bethesda leadership to make a live-service game, a decision that ultimately led to sky-high attrition and multiple delays. “Your talent will lift you up, and I will do anything I can to help,” tweeted Smith. John Johanas, game director at Tango Gameworks, was also at a loss. “So this is how it ends…” he wrote. “Unfortunately I don’t quite have the words…But at least thank you to everyone who supported us.”
Back when Microsoft acquired Bethesda in 2021, its burgeoning Game Pass model seemed like a potentially great fit for Arkane Studios, whose creatively ambitious projects didn’t always seem to find the audiences they deserved. If Bethesda would never greenlight a Prey 2, maybe a deep-pocketed tech giant would see it as as a worthwhile addition to its Netflix-like subscription gaming library. If nothing else, the newly acquired teams would have no shortage of other holes to fill in Xbox’s struggling first-party lineup.
Adam Boyes, co-CEO at Iron Galaxy Studios, juxtaposed today’s carnage with Microsoft’s bottom line in a tweet screencapping the company’s recently announced quarterly profits of roughly $20 billion. “It hurts dude… it hurts,” wrote back Rich Lambert, head of ZeniMax Online Studios. “Angry. Frustrated. Shocked. Furious. Speechless. Dumbfounded. Perplexed,” wrote Alistair Hatch, another long-time veteran of Bethesda. “I have so much love for the studios affected. The people that made those teams were incredible, hard working, dedicated, and talented.”
People from other Microsoft-owned studios and outside the company have also been horrified by the news. “We took a lot of inspiration from both Evil Within and Evil Within 2 when developing Alan Wake 2,” tweeted Remedy Entertainment game director Kyle Rowley. “They are both excellent horror games and I’m very sad we will not get to see a continuation of the franchise from Tango Gameworks. “Why do I still do this?” tweeted Obsidian Entertainment communications director Mikey Dowling.
“Arkane did solid work and had a highly talented and motivated staff,” Mike Wikan, the former Retro Studios developer who led design on Metroid Prime, wrote on LinkedIn. “Companies need to understand that burning your Creative Production Studios to the ground is NOT the path to profitability.”
Ever since Baldur’s Gate 3 exploded in popularity after its August 3 release date, the fact that it’s not coming to Xbox Series X/S the same time as PS5 has reignited the controversy around Microsoft’s console strategy and its commitment to a policy that seems like it will become increasingly unworkable in the years ahead.
Thank You, PS Plus, For Making My Backlog Even Bigger
Baldur’s Gate 3 supports local co-op splitscreen, and developer Larian Studios has been very public about its struggle to get that feature working on the less powerful Series S. Microsoft requires games to launch with the same modes on both Series X and S, and despite Baldur’s Gate 3’s popularity, no exceptions were made for the critically acclaimed Dungeons & Dragons RPG until now.
Larian director Swen Vincke said the studio had arrived at a solution after meeting with Phil Spencer, Microsoft Gaming’s CEO, at Gamescom this week. “Series S will not feature split-screen coop, but will also include cross-save progression between Steam and Xbox Series,” he tweeted, with the games now confirmed to arrive before the end of 2023.
Spencer was asked about the apparent Series S conflict in a Eurogamer interview earlier this week. “I don’t see a world where we drop S,” he said. “In terms of parity, I don’t think you’ve heard from us or Larian, that this was about parity. I think that’s more that the community is talking about it. There are features that ship on X today that do not ship on S, even from our own games, like ray-tracing that works on X, it’s not on S in certain games.”
It’s unclear if Spencer means that split-screen gameplay in Baldur’s Gate 3 isn’t a requirement on Series S. Kotaku reached out to both Microsoft and Larian Studios to clarify the situation. What is clear is that the company doesn’t plan to abandon Series S support for games in the near future. “We’re going to learn from this experience as well because we don’t love that [Baldur’s Gate 3 isn’t on Xbox yet],” Spencer told IGN in a separate interview. “But I don’t think it’s something that’s a fatal flaw in the system. It’s partners prioritizing their time, us listening and being a good partner to them.”
Image: Larian Studios
The Series S has been raising questions from the very start. As Bloomberg’s Jason Schreier pointed out on August 24, even prior to its 2019 release there were concerns from game developers that the difference in performance could make realizing their full “next-gen” ambitions more difficult on Xbox. Anecdotal reports from Gamescom are that developers there have been privately sharing frustrations about the challenges presented by the Series S as well.
Spencer noted to IGN that games like Diablo IV work fine across both platforms, and reiterated that Microsoft wants to open up gaming to more people, and sees the Series S’s low price as a cornerstone of that strategy. At $300, the less powerful console is the same price as the Nintendo Switch and $100 cheaper than the disc-less PlayStation 5. Over the recent holiday period, it was briefly marked down even further to $250. And the option to subscribe to Game Pass means Series S owners can access a huge library of games, including new blockbusters like Starfield, without shelling out hundreds more.
The popularity of the Series S for players might also be what makes it that much harder for Microsoft to leave it behind. “I also wouldn’t expect and don’t think it makes sense for Microsoft to drop Xbox Series S support or have some titles only ship on Xbox Series X,” tweeted Niko analyst Daniel Ahmad. “The primary reason being that Series S makes up a significant part of the Xbox Series X|S install base and people did indeed buy it to play ‘next gen’ games.”
Don’t expect big price drops
As laudable as the goal of an affordable next-gen console is, we’re already nearing the three-year anniversary of the Series X/S, traditionally the halfway-point in a console’s lifecycle. If there are already rumblings of some games struggling to support certain features on Series S, it seems likely to get worse by 2024, especially for timed exclusives getting ported directly from the PS5. That would be the same year in the Xbox One’s lifecycle that Microsoft released the Xbox One X mid-generation refresh that aimed to offer 4K resolution and higher framerates. A similar new console has already been ruled out this time around, however.
Spencer told Bloomberg in June that he doesn’t feel an “imperative” to release a more powerful version of the Series X, and reiterated that at Gamescom. We’re focused right now on the increased storage Xbox Series S,” he told IGN. “But no, like I said, we’re kind of at the end of the beginning in my mind. So I think we need to let devs settle on this hardware and get the most out of it.”
Image: Microsoft
Sony, meanwhile, appears set to launch a PS5 Slim within the next year. While it’s not clear if that console will have meaningfully different specs than the existing ones, it would still be a significant iteration on the hardware, especially if reports of a standalone attachable disc drive for the PS5 are also accurate. Microsoft hinted at the new console in a Federal Trade Commission court hearing in June, and footage of what’s believed to be the case at a manufacturing plant in China recently leaked as well.
Whatever new console or hardware refreshes arrive in the years ahead, Spencer warned players not to expect prices to significantly drop like they have in previous generations. “You’re not going to be able to start with a console that’s $500 thinking it’s gonna get to 200 bucks. That won’t happen,” he told Eurogamer. “It’s not the way it used to be where you could take a spec and then ride it out over 10 years and ride the price points down. It’s why you see console pricing relatively flat.”
In fact, prices have been going in the opposite direction. Microsoft raised the price of the Xbox Series X/S abroad, following in Sony’s footsteps from a year prior. Even the Nintendo Switch, released over six years ago, remains the same $300 today that it was then. The Mario maker has now sold over 125 million units. So far at least, Microsoft doesn’t seem on track to hit even half of that. It’s currently at 21 million according to a presentation slide that leaked earlier this summer, with hardware sales slowing down instead of speeding up.
Starfield could change that when it arrives on September 1. Director Todd Howard says he plays it almost exclusively on his Series S and it works just great on the cheaper console.
Update 8/24/2023 11:59 a.m. ET: Added new information about Series S version of Baldur’s Gate 3.
