Microsoft is undergoing a significant leadership transition in its gaming division. Phil Spencer, the long-time CEO of Microsoft Gaming, is retiring after 38 years with the company, effective immediately. He will be replaced by Asha Sharma, who most recently joined Microsoft in 2024 from Instacart, and previously held a role at Meta. The move comes as Microsoft navigates a challenging period for its Xbox business, marked by a nearly 10% decline in revenue during the December quarter – a steeper drop than anticipated.
Satya Nadella, Chairman and CEO of Microsoft, announced the changes in a memo to employees . Nadella emphasized the importance of gaming to Microsoft’s overall consumer strategy, noting that the company now reaches over 500 million monthly active users in the gaming space. He highlighted Sharma’s experience in scaling services to billions of users and her ability to align business models for long-term value as key reasons for her appointment.
Sharma’s background is notably outside the traditional gaming industry. Her prior roles as Chief Operating Officer at Instacart and a Vice President at Meta suggest a focus on platform development, operational scaling, and consumer-facing services. This signals a potential shift in Microsoft’s gaming strategy, potentially prioritizing broader platform growth and user engagement over purely hardware-focused competition.
Alongside Sharma’s appointment, Matt Booty has been promoted to Executive Vice President and Chief Content Officer, reporting directly to Sharma. Booty’s career has been deeply rooted in game development, and he has overseen the expansion of Microsoft Gaming to include nearly 40 studios encompassing Xbox, Bethesda, Activision Blizzard, and King. These studios are responsible for iconic franchises such as Halo, The Elder Scrolls, Call of Duty, World of Warcraft, Diablo, Candy Crush, and Fallout.
The leadership reshuffle also includes the departure of Sarah Bond, whose role was not explicitly detailed in the announcements. According to the internal memo, Bond has left Microsoft to pursue new opportunities. Her contributions were acknowledged as instrumental during a period of significant change for Xbox, including the expansion of Game Pass and cloud gaming initiatives.
Spencer’s departure follows the exits of other key Microsoft executives in recent years, including Chris Young (business development chief) and Thomas Dohmke (GitHub CEO) in 2025, and Charlie Bell, who transitioned to an individual contributor role earlier this month. This wave of departures suggests a broader organizational shift within Microsoft, potentially reflecting a strategic realignment or generational change in leadership.
The timing of these changes is particularly noteworthy given Microsoft’s recent $75 billion acquisition of Activision Blizzard in 2023. While the acquisition aimed to bolster Microsoft’s position in the gaming market, the Xbox business has faced challenges in competing with Sony’s PlayStation and Nintendo’s Switch. The company also announced an unspecified impairment charge in its gaming business in January, indicating potential financial headwinds.
In her introductory message to the team, Sharma outlined three key commitments: prioritizing “great games,” recommitting to the core Xbox fanbase, and shaping the “future of play.” She emphasized the importance of empowering studios, investing in established franchises, and taking risks on new ideas. Sharma also signaled a renewed focus on the Xbox console itself, recognizing its importance to the community and developers. She intends to break down barriers to allow developers to build once and deploy across multiple platforms.
Sharma’s vision for the future of play includes exploring new business models and leveraging artificial intelligence, but with a cautious approach. She explicitly stated a commitment to avoiding “soulless AI slop” and maintaining the artistic integrity of games, emphasizing that they should remain “crafted by humans” with the aid of innovative technology. This suggests a desire to balance technological advancement with creative quality.
Booty echoed Sharma’s commitment to game development, stating his focus will be on supporting existing studio teams and fostering an environment for creative excellence. He confirmed that We find currently no planned organizational changes within the studios themselves.
Spencer, in his farewell message, expressed gratitude for his 38 years at Microsoft and confidence in the future of Xbox. He will remain in an advisory role through the summer to ensure a smooth transition. He emphasized the importance of the community and the teams that have built Xbox into the platform it is today.
The changes at Microsoft Gaming represent a pivotal moment for the company. With a new leader at the helm and a renewed focus on platform growth, content creation, and innovation, Microsoft is positioning itself to navigate the evolving landscape of the gaming industry. The success of this transition will depend on Sharma’s ability to leverage her experience in scaling consumer services while maintaining the creative spirit and technical expertise that have defined Xbox for the past 25 years.
