As the dust settles on the overhaul of Xbox’s top leadership, two sentiments come through very clearly from almost all of the coverage and conversation around the change. The first is genuine warmth for Phil Spencer, whose tenure as CEO of Microsoft Gaming was not without missteps, but whose personal commitment and passion for Xbox and video games was never in question. The second is deep trepidation for the future of Microsoft’s engagement with gaming.
That trepidation is driven in no small part by Spencer’s replacement, Asha Sharma – who is moving over from the company’s CoreAI team to head up the Gaming division. Sharma’s background in AI gives many people pause. Her complete lack of professional experience with video games makes that pause extend for an uncomfortably long time.
The response may be knee-jerk, but it’s not entirely unfair. Anyone who’s been around for long enough can point to deep scars in the industry landscape left by executives parachuted in from other industries with little knowledge or interest in games. To replace a true believer in the gaming medium like Spencer with a life-long tech executive who’s never even dabbled in this space before makes people understandably nervous at a crucial juncture when Microsoft controls more of the games industry than ever through its ownership of studios and publishers, yet often seems to have lost sight of a coherent identity and strategy for Xbox.
On the other hand, one doesn’t need to be playing devil’s advocate to poke some holes in that framing. Spencer was sincere and passionate, but has, with the best will in the world, left Xbox in dire straits, looking rudderless after tens of billions of dollars’ worth of publisher acquisitions. His predecessor, Don Mattrick, was also a life-long games industry veteran, who founded his first development studio while still a teenager; he oversaw the Xbox project coming entirely off the rails with awful strategic decisions around the Xbox One launch from which the brand has never fully recovered. Arguably, the Xbox’s most resoundingly successful era came under Peter Moore – a sporting goods executive who knew next to nothing about video games until Sega of America hired him from Reebok to help them launch the Dreamcast.
If passion and sincerity, industry knowledge, or commitment to the gaming medium were all it took to succeed as CEO of Microsoft Gaming, the Xbox wouldn’t be in its parlous state. To be clear, I’m not saying any of those things are bad to have – but they’re not sufficient on their own, and even an executive who doesn’t pick up a joypad to relax in their spare time can still provide clear leadership and make sound strategic decisions.
There are few roles in the industry where that’s more true than the seat Asha Sharma now occupies. Heading Microsoft Gaming is arguably the toughest job in the industry, because it sits on a pivot point between the needs of Xbox and its studios and the strategic goals of Microsoft’s top management, which can often be poorly aligned with one another. Success for Xbox leadership isn’t just about devising and executing a competent strategy for the gaming division; it’s also about ensuring that the rest of the giant company is on board with that strategy.
“Lots of people are wondering out loud whether Sharma is moving over from CoreAI as a Trojan horse of sorts”
All too often that has led to the division trying to fit square pegs into round holes as it spins its gaming strategy to fit with the current overarching obsession of the broader company. There was a fairly grim few years when everyone in Microsoft Gaming had to pay constant public lip-service to the notion that Xbox games would be leveraging “the power of the cloud”, not because anyone had any especially great ideas for using cloud services in games, but because Microsoft’s broader strategic objectives were all about growing its own Azure cloud services.
Today, of course, Microsoft is all about AI. Consequently, lots of people are wondering out loud whether Sharma is moving over from CoreAI as a Trojan horse of sorts, parachuted in to ensure that Copilot is obnoxiously wedged into every Xbox game and service.
I’m braced to be proven naïve, but I’m cautiously optimistic on that score. I don’t think Sharma’s appointment is an AI play, and while talk is cheap, I think it’s notable that she’s making all the right noises around the usage of generative AI in the company’s gaming offerings. To be clear, I’m certainly not so naïve that I buy the protesting-too-much claims that Microsoft isn’t putting any pressure on its game studios to adopt AI; Microsoft can’t go five seconds without trying to force Copilot down the throats of literally anyone else in the world, but they want us to believe its own game studios don’t get the hard sell? Sure.
Sharma, however, was only in the AI role for a couple of years, with the rest of her track record being much more standard tech executive stuff – usually overseeing product development and customer acquisition for consumer-facing services. That’s still a body of experience that’s going to leave her with a Matterhorn of a learning curve at Xbox, but it’s a lot better aligned to what the division needs right now than being a glassy-eyed AI evangelist would be.
What Xbox needs right now – in the broadest possible terms – is a very public refocus on what the product and the brand actually are, what they offer to consumers, and how they differ from the competition. The optimistic read of Sharma’s appointment is that it reflects Microsoft understanding and accepting the nature of that challenge. There has been talk of senior management losing patience with the direction being taken by Spencer and former Xbox president Sarah Bond (who was expected to replace Spencer, but has instead left the company along with him). If so, good. Patience needed to be lost for the kind of radical changes Xbox needs to become possible.
Their departure and the arrival of Sharma seems, at least, to mark the end of the disastrous “This is an Xbox” strategy, which left consumers confused about what an Xbox was and massively undermined the company’s own hardware. Sharma talks a good game about refocusing on hardware, which is great. It doesn’t change the fact that Microsoft still faces major challenges with continuing as a console manufacturer, especially given the current supply chain and pricing problems. Still, making an actual commitment to Xbox hardware – hopefully one that sees the company reconsidering the idea of its next-gen hardware being essentially a very expensive Xbox-branded Windows PC, as Bond seemed to hint at last year – is at least an indication that the company plans to face down those challenges, rather than folding and leaving the Xbox brand to become a nebulously defined label slapped on online services and third-party hardware.
That was the future Xbox was facing – and while it may still come to pass, I think the mood music coming out of Microsoft around Sharma’s appointment is the clearest indication yet that upper management sees that potential future and doesn’t like it one bit. For all that Microsoft has mishandled its gaming division in recent years, it has also pumped the best part of $100 billion into it; and even beyond the financial commitment, I think there’s a genuine desire at the top of the company to ensure Xbox is a healthy, competitive brand.
“Her appointment speaks to a company that’s willing to pivot away from a failing strategy”
Completely aside from wanting to see a return on its investment in companies like Activision Blizzard and Zenimax, Microsoft’s top executives will also be very painfully aware of the company’s sliding image and relevance in consumer markets. Even the once-unassailable dominance of Windows looks more fragile and shaky than ever on consumer devices (although they still rule supreme for business devices), most recently thanks to the backlash to tight Copilot integration in the company’s software. Xbox is Microsoft’s most successful and positively viewed brand among many groups of consumers, especially younger consumers.
That’s the huge investment Microsoft has to protect in gaming; not just the $100 billion in studio and publisher acquisitions, but also 25 years of hard slog to create a well-loved consumer brand. That’s something the company is usually very bad at – Zune and Windows Phone are not so long ago – so this rare success should be treasured.
Does that mean Sharma will succeed? Not necessarily. It’s the hardest job in the industry, and she has so little experience of this sector that she probably doesn’t even know what she doesn’t know, as yet. But her appointment speaks to a company that’s willing to pivot away from a failing strategy, and her initial statements – taken at face value – speak to wanting to restore the Xbox business and rebuild its credibility among gamers. For now, I think we can afford her a moment of optimism for that, rather than projecting doomsday ulterior motives onto the appointment.
