Microsoft’s head of gaming Phil Spencer is retiring after 38 years with the Xbox parent company.
“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,” Spencer said in a memo to staff on Friday. “Last fall, I shared with [Microsoft CEO Satya Nadella] 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.”
His retirement comes as Xbox, which has over 500 million monthly active users, celebrates its 25th anniversary this year.
“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,” Spencer continued. “And it deserves a thoughtful, deliberate plan for the road ahead.”
Asha Sharma, who has served as the president of Microsoft’s CoreAI product, will succeed Spencer as the gaming unit’s executive vice president and CEO.
“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,” she said. “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.”
Spencer will stay on in an advisory role through the summer to support the leadership transition.
“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,” he said. 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.”
In addition to Spencer’s retirement, Xbox president Sarah Bond is exiting the company.
“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,” Spencer said. “I’m grateful for her partnership and the impact she’s had, and I wish her the very best in what comes next.”
During Microsoft’s second quarter of fiscal 2026, revenue in its games business fell 9%, while Xbox content and services revenue fell 5% and 6%, respectively. In her own memo to staff, Sharma acknowledged that gaming is in a “period of rapid change” and that Microsoft and Xbox need to “move with clarity and conviction.”
“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,” she said. “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.”
She also said the company would “recommit” to the company’s core Xbox fans and players and to the developers who build the expansive universes and experiences that are embraced by players across the world.”
“Gaming now lives across devices, not within the limits of any single piece of hardware,” Sharma said. “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.”
As part of this effort, Matt Booty has been promoted to EVP and chief content officer and will report directly to Sharma. 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.”
“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,” she added.
In addition, Sharma said Microsoft would invent new business models and ways to play by building 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,” she said. “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.”
