Craig Duncan, the head of Xbox Game Studios, and Louise O’Connor, chief of staff for Microsoft’s gaming division, will leave the company in mid-June 2026, according to multiple reports. Their departures come just days after new Xbox leadership assumed control, marking a dramatic upheaval inside one of the gaming industry’s most influential organizations. The exits signal an acceleration of the sweeping reset that has already seen thousands of layoffs, studio closures, and a fundamental rethinking of Microsoft’s gaming strategy.
A Sudden Shakeup
The timing of these departures is impossible to ignore. Only last week, Asha Sharma, a veteran of Google and Meta, officially took over as the new head of Xbox, stepping into the role amid a broader executive overhaul. Duncan and O’Connor’s decision to leave within days of Sharma’s arrival suggests a deliberate clearing of the decks—or perhaps an unwillingness to implement a vision that diverges sharply from the one they helped build.
Duncan’s exit is particularly striking. He ascended to the top of Xbox Game Studios in 2024 after Matt Booty was promoted to president of game content and studios. Before that, Duncan spent years as studio head at Rare, where he steered the historic developer through a renaissance with the live-service hit Sea of Thieves. Louise O’Connor, a Microsoft lifer, served as executive producer at Rare before becoming chief of staff for Xbox Game Studios, where she played a pivotal role in integrating acquired studios into the Microsoft fold.
Neither Microsoft nor the two executives have publicly commented on the reasons for the departures. Internal sources, however, describe a tense atmosphere as the new leadership team moves quickly to reshape the division’s priorities.
Who Are Craig Duncan and Louise O’Connor?
Craig Duncan’s tenure at Microsoft is defined by two acts. As Rare’s studio head, he rescued a studio that had languished after the Kinect era, championing Sea of Thieves from a rocky launch into a pillar of Xbox’s live-service lineup. When he took over Xbox Game Studios in 2024, he inherited a sprawling network of developers—from 343 Industries to Bethesda and the newly absorbed Activision Blizzard teams—tasked with delivering a steady cadence of blockbusters for Game Pass.
Louise O’Connor was the connective tissue behind the scenes. She helped orchestrate the massive expansion of Xbox’s first-party capabilities, facilitating acquisitions and ensuring that studios like Ninja Theory, Obsidian, and Bethesda could collaborate without losing their identity. Insiders credit her with building the operational backbone that allowed Xbox Game Studios to balloon to over 30 teams.
Together, their departures leave gaping holes in both the creative leadership and the operational machinery of Microsoft’s gaming business.
The Timing: A New Xbox Era Begins
Asha Sharma’s appointment as head of Xbox is widely seen as a mandate for change. Sharma made her name at Google Play and later at Meta, where she led product strategy for the Quest platform. Her background is rooted in ecosystems, services, and platform growth—not traditional console gaming. Microsoft CEO Satya Nadella has repeatedly emphasized that the future of Xbox lies beyond the box itself, and Sharma’s hire is the clearest signal yet that the company is pivoting from a hardware-centric model to a multiplatform, service-driven powerhouse.
Duncan, by contrast, was a product of the studio system. His expertise lay in cultivating creative talent and shipping games—and under his watch, Xbox did deliver, with titles like Starfield, Hellblade II, and Avowed meeting critical acclaim. But the ground has shifted. The new Xbox is less about exclusive titles that sell consoles and more about maximizing player reach across every screen. In that world, a studio-focused leader may no longer be the right fit.
Microsoft’s Gaming Reset: Layoffs and Strategy Pivot
The context for these exits is a Microsoft gaming division that has been in a state of near-constant restructuring since the landmark $68.7 billion Activision Blizzard acquisition closed in October 2023. To understand the current turmoil, one must trace the series of cuts and closures that have followed.
In January 2025, Microsoft eliminated 1,900 positions across Activision Blizzard and Xbox—roughly 8% of its gaming workforce. Then, in September 2025, another 650 roles were axed, primarily from corporate and support functions. High-profile studios weren’t spared: Tango Gameworks, the developer of Hi-Fi Rush, was shut down; Arkane Austin, the team behind Redfall, was closed; and Alpha Dog Games, a mobile studio, was shuttered. The message was unmistakable: underperform or operate outside the core strategy, and you’re gone.
The new strategy is easy to outline but difficult to execute. Xbox is transforming into what Phil Spencer once called a “platform for play.” That means releasing first-party titles on PlayStation and Nintendo Switch—a move already underway with Sea of Thieves, Grounded, and Pentiment. It means investing heavily in cloud streaming and Game Pass, which now counts over 40 million subscribers but has seen growth plateau. And it means building a mobile storefront, leveraging the Activision Blizzard King portfolio.
Game Pass remains the linchpin. The subscription service generates over $3 billion in annual revenue, but profitability is elusive as Microsoft spends billions on third-party deals and day-one releases. The company now faces the challenge of growing subscribers without sacrificing margins—a dilemma that likely contributed to the leadership changes.
Impact on Xbox Game Studios and Upcoming Titles
With Duncan gone, the immediate question is who will steer the ship. The obvious internal candidate is Matt Booty, who still oversees game content and studios at the corporate level. But Booty’s role is broader, and a new head of Xbox Game Studios may be named from outside the company—perhaps someone with a background in production management or live-service operations rather than game development.
For developers, the upheaval is unsettling. Studios that were already nervous about their future now face a vacuum in leadership. Several critical titles are in the pipeline: Perfect Dark, from The Initiative, has been in development since 2018 and has reportedly suffered from direction changes. Fable, by Playground Games, is one of Xbox’s biggest bets for 2026. Everwild, from Rare, remains shrouded in mystery after multiple restarts. Any instability at the top can delay these projects or shift their creative direction.
There’s also the question of how the new leadership will handle existing commitments. Will the dual-release strategy accelerate, meaning that major Xbox games land on PlayStation day one? Will Game Pass become the primary monetization vehicle, requiring every title to incorporate live-service elements or microtransactions? These are the kinds of decisions that can fracture internal morale and alienate creative talent.
Industry and Community Reaction
The gaming community has reacted to the departures with a mix of shock and weary resignation. On social media, fans lament what they see as the “corporate-ification” of Xbox, arguing that the brand is losing its identity. Some point to Duncan’s legacy at Rare as proof that Xbox needs studio veterans, not Silicon Valley executives. Others see the exits as a necessary pruning—a sign that Microsoft is finally getting serious about efficiency after years of bloated spending.
Industry analysts echo the latter view. “The Activision Blizzard deal forced Microsoft to reckon with a massive cost structure,” says Joost van Dreunen, a gaming analyst at Newzoo. “They can’t afford to run Xbox Game Studios like a creative commune. Sharma’s appointment and these departures suggest a tighter focus on profitability at all costs.”
Yet the cost could be high. Creative talent is already fleeing the industry, burned out by layoffs and the homogeneity of live-service games. If Microsoft is seen as a place where studio heads are disposable, it may struggle to attract the visionary leaders who can produce the next Elder Scrolls or Halo.
What’s Next for Xbox?
The clock is ticking. Microsoft’s fiscal year ends in June, and the company will want its new team in place before the next earnings report. Expect a new head of Xbox Game Studios to be named within weeks, likely from outside the traditional gaming world. And expect more consolidation: with over 30 studios, Microsoft may decide that fewer, larger teams are more efficient than a scattered federation.
The hardware roadmap is also in flux. The next generation of Xbox consoles, reportedly code-named “Brooklin,” is slated for 2027, but insiders now say the project has been de-prioritized in favor of a cloud-centric streaming device and deeper integration with Smart TV and mobile platforms. Craig Duncan was a champion of the console tradition; his exit may further diminish the priority of dedicated hardware.
Ultimately, the departures of Duncan and O’Connor are not just personnel changes—they are cultural tremors. They signal the end of an era in which Xbox sought to compete by cultivating exclusive, high-budget experiences. The new Xbox will be leaner, more pragmatic, and perhaps more profitable. Whether it remains a place where the industry’s best talent wants to work is the open question that will define Microsoft’s gaming future.