Matt Booty Confirms No Xbox Studio Layoffs Following Spencer and Bond Departures

Let's be real - when two of the biggest names at Xbox walk out the door in the same week, people are going to panic. And fair enough.

Phil Spencer's retirement hit differently for a lot of fans. Thirty-eight years at Microsoft, 12 of those steering Xbox through some genuinely rough waters. Then, almost simultaneously, Xbox president Sarah Bond - who many assumed was the heir apparent - announced she was leaving too. Not stepping sideways into another role. Gone. That kind of back-to-back departure, especially off the back of the studio closures and layoffs Microsoft has been handing out over recent years, had a lot of people assuming the worst was coming.

It's not, according to Matt Booty. At least not right now.

Booty, now promoted to Executive Vice President and Chief Content Officer, addressed staff directly following the announcements. His message was blunt and to the point: his focus is "on supporting the teams and leaders we have in place and creating the conditions for them to do their best work." No restructuring. No further cuts. He pointed to a "strong pipeline of established franchises, new bets we believe in, and clear player demand for what we are building" as the basis for his confidence going forward.

Whether you believe that or not probably depends on how much goodwill Microsoft has left with you.

Booty's promotion was actually framed as a vote of confidence by incoming CEO Asha Sharma, who came to Microsoft Gaming from her role as president of CoreAI. Sharma, writing to staff in a memo that's since been widely circulated, said she "promoted Matt Booty in honour of this commitment" to great games. Her words: he "understands the craft and the challenges of building great games, has led teams that deliver award-winning work, and has earned the trust of game developers across the industry."

Sharma's wider statement is worth paying attention to. She laid out three areas she wants Xbox to commit to: great games first and foremost, a return to core Xbox identity (with a specific shout-out to console), and what she called "reinventing play" for the future. On the AI front, she was notably direct, telling staff Xbox would "not chase short-term efficiency or flood our ecosystem with soulless AI slop." Given she came from an AI-focused division, that line was clearly meant to get ahead of the obvious criticism.

She's also pledged a "renewed commitment to Xbox starting with console" - an interesting statement given how much of the past few years has been about positioning Xbox as a platform-agnostic, games-everywhere service rather than a hardware-first brand.

Spencer, for his part, signed off graciously. He wrote on X that after 38 years it felt like the right moment, and said he would remain in an advisory role through summer to help with the transition. Bond echoed a similar tone in her LinkedIn statement, saying she had spent time with Sharma ahead of the handover and was confident in the direction ahead.

The context here matters, though. Xbox gaming revenue dropped around 10% in the December quarter. Microsoft took an impairment charge on its gaming business in January. The $75 billion Activision Blizzard acquisition was meant to change everything, and the results have been... mixed. Current-gen Xbox consoles are still well behind PlayStation and Switch in terms of popularity, and the studio closures of 2025 left real scars across the industry.

Booty's reassurances are welcome. But reassurances are one thing. What actually happens to the studios, to the games, to the people working on them - that's the part fans are watching closely now.

2026 is already shaping up to be a defining year for Xbox regardless. Halo: Campaign Evolved, a Fable reboot, and Gears of War: E-Day are all in the pipeline, and a next-generation Xbox console is reportedly in development. Sharma and Booty don't have long before the games start speaking for themselves.