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Bond managed to hold it together. “How I feel right now doesn’t matter,” she recalls thinking. Almost immediately, she began to focus on the rationale for the ruling, looking for an alternative to accepting defeat. There was no precedent for the CMA changing its mind in such a situation, but Bond, who’d been a rising star at Microsoft since joining in 2017, had to try. She had volunteered to lead the effort in handling Activision-related regulatory approvals. It was a task that meant months of weekends poring over spreadsheets and regulatory documents with her merger team, most of whom were women, and shuttling back and forth across the Atlantic. She was soon back on a plane to the UK to give it one last shot.
Bond’s strategy was to satisfy the CMA’s desire for structural changes rather than to simply offer promises of good behavior. She told the agency that Microsoft was willing to sell off some rights to stream its video games. This would help mollify the CMA’s concerns without cutting too much into what Bond saw as the real prize: a foothold in the enormous mobile market.
In mid-October, the CMA announced it would indeed reverse its previous rejection, with the agency’s senior director of mergers saying the changes made it a “new and substantially different deal.” To celebrate, Bond invited the merger team to her living room for a Champagne toast. Two weeks later, Spencer promoted her to president of Xbox.
Layoffs
Microsoft has already cut more than 2,650 games jobs this year, with a quarter of the cuts announced in mid-September. These are part of industrywide job losses totaling 11,500. Its gaming unit is operating under a challenging set of revenue and profit goals, according to people familiar with Xbox’s business, who declined to be named while discussing private financial matters.
With the Activision deal closed, Bond and Spencer also began making even harder financial decisions. In January, the company cut 1,900 jobs. Then, on a Tuesday morning in May, Matt Booty, head of Xbox Game Studios, said it would close four studios under its ZeniMax subsidiary, purchased by Microsoft for $7.5 billion in 2021. To Xbox’s executive ranks, the moves seemed to be the kind of belt-tightening an evolving business does to try to maintain efficiency. Others saw Microsoft as kicking its workers aside during a period of jaw-dropping profits. YouTube videos with titles like “Can We Trust Xbox Anymore?” and “Microsoft Has Lost the Plot” amassed thousands of views. The day of the announcement, the co-CEO of independent game developer Iron Galaxy Studios LLC posted a screenshot of an article showing Microsoft’s profit had risen 20% in the previous quarter, to $21.9 billion.
The vast majority of Microsoft’s profits, of course, come from parts of its business that have little to do with gaming. It is Bond’s job to reassure Microsoft CEO Satya Nadella and Chief Financial Officer Amy Hood that gaming is still a growth business. Two days after the announcements of the studio closures, she teleconferenced into a board meeting from a hotel room in San Francisco to present a plan she’d spent months developing. As she advanced through her slide deck, Spencer watched the faces of the board members to gauge their reactions. “You could see the board grasp how Xbox could be so much bigger than it is today,” he says.
Joining Xbox
When Bond joined Microsoft, she saw similar dynamics in the gaming industry. Console companies had thrived during their own growth era but had become set in their ways at a time when shifting customer habits demanded imaginative changes. Xbox was losing ground to PlayStation, and it would have been easy to just do whatever Sony did. But when Spencer needed to fill a spot vacated by a retiring business development executive in 2017, he was compelled by the idea of someone like Bond, who not only came from outside the industry but also had specific experience in mobile. “Looking at the games industry, it was pretty clear that the things we knew were not going to be enough to get us to where we were going,” he says.
When he hired Bond, Spencer warned her that the job was going to be frustrating. Microsoft is a notoriously difficult company for those who come in at executive levels. Bond would be replacing someone who’d been at Xbox for almost two decades and reporting to a guy who’d been at Microsoft since he was an intern. Colleagues say she’s a consensus builder who quickly set about winning over her team. “No one can just see a situation and quickly grasp exactly what’s going on faster than Sarah,” says Chris Charla, one of her reports, who oversees indie developers. He also remembers how, during Bond’s first Game Developers Conference for Microsoft, she agreed to an impromptu spelunking expedition through San Francisco’s underground tunnels—even though she was wearing heels.
Sarah and Phil's "Clash"
At first, Bond’s and Spencer’s personal styles clashed, and the two sought out Microsoft human resources chief Kathleen Hogan for coaching, an unusual step that Hogan found admirable. Bond recalls Spencer and others at Microsoft telling her that her tendency to “push the envelope” and “not let something go” was new to them. She says she found that Spencer’s communication style sometimes left her unsure of what he actually wanted from her. At one point, she stuck a Post-It note to her computer with some advice about interacting with him. “I’m not being paid to do what he says,” it read. “I’m being paid to do what he meant.”
Questions of chemistry aside, there was bound to be tension surrounding Bond’s role at Xbox. Spencer had hired her, after all, to force his operation to take the uncomfortable step of moving beyond the device it existed to promote. For the last two or three Xbox generations, “we’ve been selling consoles to the same 200 million global households,” he says. “I’m happy to do that. But it’s not really growing the business.”
Game Pass
Game Pass was also a major adjustment for publishers. To sweeten the deal, Microsoft now spends $1 billion a year getting third-party games on the subscription service. The largesse has been more than enough to win over small publishers, to whom it offers flat fees of millions of dollars upfront to include their titles, along with a portion of subscription revenue and the promise of exposure they couldn’t count on getting otherwise.
Mutual affection was apparent in March at this year’s Game Developers Conference, when Bond showed up for a meet-and-greet at a San Francisco event space known for its chicken and waffles. Winning Bond over can be a big deal, given the role she plays in determining which games are featured in Xbox’s periodic showcases, events that can propel obscure developers into household names. Publishers vied for her attention from the moment they heard her heels clicking across the floor, as she stopped to play a game about stocking shelves in a Japanese convenience store, then a farming simulator.
Larger publishers, which are well- practiced in generating release-day hype for their games, remain more skeptical, even as Game Pass subscriptions have reached 34 million. Strauss Zelnick, CEO of Grand Theft Auto and NBA 2K publisher Take-Two Interactive Software Inc., speaks highly of Bond, calling her thoughtful and warm, while also acknowledging that she “will not be dissuaded” from accomplishing Microsoft’s goals, even when they don’t align with his own. Take-Two continues to have a limited presence on Game Pass; Zelnick says he doesn’t think offering big-time games on their release date “would make any sense at all.”
Stats
The vibes around Xbox had recovered a bit by July, when Bond invited two Bloomberg Businessweek reporters to the same house where she’d toasted the Activision deal. She ticked off a list of her team’s achievements: growth in cloud and PC gaming, highly positive reviews from Game Pass users. Even on consoles, engagement hit an all-time high this year. The players she worried about attracting, she said, were showing up: “They clearly like what we’re doing. Right?”
Microsoft has said Game Pass subscribers spend 50% more on games than nonsubscribers, and industry observers agree Bond has helped pull the operation out of its malaise. “Xbox has always been a bridesmaid and never a bride,” says Joost van Dreunen, a lecturer at the New York University Stern School of Business. “It knows that and is comfortable with that, but it’s changed its ambitions, and I’d attribute that to the arrival of Sarah Bond, among other things.”
Hardware
Yet Bond has said there will be a new Xbox, and that the next generation of the console will feature “the largest technical leap you will have ever seen.” And then there’s the flirtation with the idea of launching a handheld gaming device. The company has made no commitment about this, though Spencer says he tasked Bond with building a “more diverse” hardware future for Microsoft. He has taken every opportunity to say he loves portable gaming devices and says the company would just have to come up with something different from what’s already on the market.
Diving into the multiyear project of building a new console could seem like Microsoft backsliding into the model it hired Bond to break out of, even before it’s figured out how to make money from its new hybrid business of subscriptions and smartphone gaming. But she talks about a handheld device as another way to insert an Xbox-specific experience into the lives of future gamers whose habits have yet to be formed. For Xbox to succeed, she says, it has to meet gamers wherever they are. “I want people to think no matter who you are, you can come to Xbox and find a game,” she says. “It’s for you.”
