Phil Spencer retiring from Xbox, Microsoft AI exec Asha Sharma taking over gaming division

Xbox president Sarah Bond to depart Microsoft. Sharma, hyping Xbox, promises: "we will not chase short-term efficiency or flood our ecosystem with soulless AI slop."

Phil Spencer in 2019

Phil Spencer, the longtime had of Xbox and gaming at Microsoft, is stepping down. That move is part of a massive change in the leadership team for one of the big three console makers.

Taking over for Spencer for head of gaming at Microsoft will be Asha Sharma, the current head of CoreAI at Microsoft, according to Microsoft’s announcements about the change over.

Microsoft head of game studios Matt Booty will remain on the team, rising to chief content officer.

Xbox president Sarah Bond is exiting Microsoft.

Spencer will stay on as an adviser into the summer.

Sharma joined Microsoft in 2024, having previously served as chief operating officer of Instacart.

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The moves were announced via emails from Satya Nadella, Sharma, Spencer and Booty today.

Nadella:

Gaming has been part of Microsoft from the start. Flight Simulator shipped before Windows, and you can practically ray‑trace a line from DirectX in the ’90s to the accelerated‑compute era we’re in today.

As we celebrate Xbox’s 25^th year, the opportunity and innovation agenda in front of us is expansive. Today we reach over 500 million monthly active users, are a top publisher across all platforms, and continue to innovate across gaming hardware, content, and community, in service of creators and players everywhere.

I am long on gaming and its role at the center of our consumer ambition, and as we look ahead, I’m excited to share that Asha Sharma will become Executive Vice President and CEO, Microsoft Gaming, reporting to me. Over the last two years at Microsoft, and previously as Chief Operating Officer at Instacart and a Vice President at Meta, Asha has helped build and scale services that reach billions of people and support thriving consumer and developer ecosystems. She brings deep experience building and growing platforms, aligning business models to long-term value, and operating at global scale, which will be critical in leading our gaming business into its next era of growth.

Matt Booty will become Executive Vice President and Chief Content Officer, reporting to Asha. Matt’s career reflects a lifelong commitment to games and to the people who make them. Under his leadership, Microsoft Gaming has grown to span nearly 40 studios across Xbox, Bethesda, Activision Blizzard, and King, which are home to beloved franchises including Halo, The Elder Scrolls, Call of Duty, World of Warcraft, Diablo, Candy Crush, and Fallout.

Together, Asha and Matt have the right combination of consumer product leadership and gaming depth to push our platform innovation and content pipeline forward. Last year, Phil Spencer made the decision to retire from the company, and since then we’ve been talking about succession planning. I want to thank Phil for his extraordinary leadership and partnership. Over 38 years at Microsoft, including 12 years leading Gaming, Phil helped transform what we do and how we do it. He expanded our reach across PC, mobile, and cloud; nearly tripled the size of the business; helped shape our strategy through the acquisitions of Activision Blizzard, ZeniMax, and Minecraft; and strengthened our culture across our studios and platforms. I’ve long admired Phil’s unwavering commitment to players, creators, and his team, and I am personally grateful for his leadership and counsel. He will continue working closely with Asha to ensure a smooth transition.

We have extraordinary creative talent across our studios and a global platform that is second to none. I’m excited for how we will capture the opportunity ahead and define what comes next, while staying grounded in what players and creators value.

Please join me in congratulating Asha and Matt on their new roles, and in thanking Phil for everything he has done for Microsoft and for our industry.

Spencer:

When I walked through Microsoft’s doors as an intern in June of 1988, I could never have imagined the products I’d help build, the players and customers we’d serve, or the extraordinary teams I’d be lucky enough to join. It’s been an epic ride and truly the privilege of a lifetime.

Last fall, I shared with Satya that I was thinking about stepping back and starting the next chapter of my life. From that moment, we aligned on approaching this transition with intention, ensuring stability, and strengthening the foundation we’ve built. Xbox has always been more than a business. It’s a vibrant community of players, creators, and teams who care deeply about what we build and how we build it. And it deserves a thoughtful, deliberate plan for the road ahead.

Today marks an exciting new chapter for Microsoft Gaming as Asha Sharma steps into the role of CEO, and I want to be the first to welcome her to this incredible team. Working with her over the past several months has given me tremendous confidence. She brings genuine curiosity, clarity and a deep commitment to understanding players, creators, and the decisions that shape our future. We know this is an important moment for our fans, partners, and team, and we’re committed to getting it right. I’ll remain in an advisory role through the summer to support a smooth handoff.

I’m also grateful for the strength of our studios organization. Matt Booty and our studios teams continue to build an incredible portfolio, and I have full confidence in the leadership and creative momentum across our global studios. I want to congratulate Matt on his promotion to EVP and Chief Content Officer.

As part of this transition, Sarah Bond has decided to leave Microsoft to begin a new chapter. Sarah has been instrumental during a defining period for Xbox, shaping our platform strategy, expanding Game Pass and cloud gaming, supporting new hardware launches, and guiding some of the most significant moments in our history. I’m grateful for her partnership and the impact she’s had, and I wish her the very best in what comes next.

Most of all, to everyone in Microsoft Gaming, I want to say “thank you.” I’ve learned so much from this team and community, grown alongside you, and been continually inspired by the creativity, courage, and care you bring to players, creators, and to one another every day.

I’m incredibly proud of what we’ve built together over the last 25 years, and I have complete confidence in all of you and in the opportunities ahead. I’ll be cheering you on in this next chapter as Xbox’s proudest fan and player.

Sharma:

Today I begin my role as CEO of Microsoft Gaming.

I feel two things at once: humility and urgency.

Humility because this team has built something extraordinary over decades. Urgency because gaming is in a period of rapid change, and we need to move with clarity and conviction.

I am stepping into work shaped by generations of artists, engineers, designers, writers, musicians, operators and more who create worlds that have brought joy and deep personal meaning to hundreds of millions of players. The level of craft here is exceptional, and it is amplified by Xbox, which was founded in the belief that the power of games connects people and pushes the industry forward.

Thank you to Phil for his leadership, and to every studio, platform, and operations team that built this foundation. We are stewards of some of the most loved stories and characters in entertainment and bring players and creators together around the fun and community of gaming in entirely new ways.

My first job is simple: understand what makes this work and protect it.

That starts with three commitments.

First, great games.

Everything begins here. We must have great games beloved by players before we do anything. Unforgettable characters, stories that make us feel, innovative game play, and creative excellence. We will empower our studios, invest in iconic franchises, and back bold new ideas. We will take risks. We will enter new categories and markets where we can add real value, grounded in what players care about most.

I promoted Matt Booty in honor of this commitment. 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.

Second, the return of Xbox.

We will recommit to our core Xbox fans and players, those who have invested with us for the past 25 years, and to the developers who build the expansive universes and experiences that are embraced by players across the world.

We will celebrate our roots with a renewed commitment to Xbox starting with console which has shaped who we are. It connects us to the players and fans who invest in Xbox, and to the developers who build ambitious experiences for it.

Gaming now lives across devices, not within the limits of any single piece of hardware. As we expand across PC, mobile, and cloud, Xbox should feel seamless, instant, and worthy of the communities we serve. We will break down barriers so developers can build once and reach players everywhere without compromise.

Third, future of play.

We are witnessing the reinvention of play.

To meet the moment, we will invent new business models and new ways to play by leaning into what we already have: iconic teams, characters, and worlds that people love. But we will not treat those worlds as static IP to milk and monetize. We will build a shared platform and tools that empower developers and players to create and share their own stories.

As monetization and AI evolve and influence this future, we will not chase short-term efficiency or flood our ecosystem with soulless AI slop. Games are and always will be art, crafted by humans, and created with the most innovative technology provided by us.

The next 25 years belong to the teams who dare to build something surprising, something no one else is willing to try, and have the patience to see it through. We have done this before, and I am here to help us do it again. I want to return to the renegade spirit that built Xbox in the first place. It will require us to relentlessly question everything, revisit processes, protect what works, and be brave enough to change what does not.

Thank you for welcoming me into this journey.

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Spencer joined Microsoft in the 1990s as a programmer and project manager before joining the nascent Xbox team in 2001 as the head of Studio X, which partnered with external developers.

He rose to overseeing all of Microsoft’s internal game development and then, in 2014, all of Xbox.

“I loved the process of building games and, probably equally, I loved seeing how different teams could build amazing games in their own way,” Spencer told me in 2022 for a career-spanning interview.

Spencer earned respect internally and externally as a thoughtful leader whose emphasis on Xbox as a video game maker helped redeem a brand reputation tarnished by the rough mid-2014 TV/non-gaming-centric reveal of the Xbox One.

The Xbox executive publicly challenged conventions of the industry, cheerfully congratulating competitors and championing an Xbox strategy that broke out of old exclusivity traditions, first by releasing first party Xbox console games day-and-date on PC, then in 2024, overseeing a push to bring more and more Xbox franchises (Sea of Thieves, later Forza, soon Halo) to PlayStation platforms, and in some cases, Switch.

Under Spencer, Microsoft purchased Minecraft and its studio Mojang in 2014. In the years that followed, Spencer presided over more studio acquisitions, including DoubleFine (Psychonauts), Obsidian (Avowed, The Outer Worlds) and Compulsion (South of Midnight).

Spencer marshaled Microsoft’s financial might to make some of the industry’s biggest purchases.

The company bought ZeniMax Media in 2020/2021 for $7.5 billion. That added Bethesda (Elder Scrolls, Fallout), id Software (Doom) and others to Microsoft’s portfolio.

In 2023, Microsoft completed its $69 billion purchase of Activision Blizzard, bringing the makers of Call of Duty, World of Warcraft and Candy Crush onto the team. That deal was initiated by Spencer’s contacts with Activision Blizzard CEO Bobby Kotick in November 2021. In 2022, Spencer described the Activision deal to me as “well beyond anything I’ve ever done.”

Along the way, Spencer’s vision for gaming at Xbox saw its biggest games released as part of the Game Pass subscription service, a Netflix-style all-you-can play offering that even Call of Duty was added into.

That deal and strategy allowed Microsoft to become one of the biggest game publishers on the planet, in terms of headcount and sales.

But Spencer was unable to get the Xbox One out of the bind he inherited and plans for 2020’s Xbox Series generation couldn’t match the momentum of rival PS5.

For the last two generations, Microsoft has had to settle for operating a third-place console, but, largely through some plans teased by Spencer’s lieutenant at Microsoft gaming, Xbox president Sarah Bond, has promised to innovate again.

This is a breaking news story and will be updated online.