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Phil Spencer is retiring as CEO of Microsoft Gaming after 38 years with the company, Microsoft announced Friday. The departure of the long-time executive, who oversaw landmark acquisitions including Activision Blizzard, comes as the gaming division faces declining revenue and increased competition.
Asha Sharma, currently president of product development for Microsoft’s CoreAI division, will succeed Spencer as executive vice president and CEO of Microsoft Gaming, reporting to Microsoft CEO Satya Nadella. Sharma joined Microsoft in 2024, having previously held leadership positions at Meta and Instacart.
“Last year, Phil Spencer made the decision to retire from the company and since then we’ve been talking about succession planning,” Nadella said in a statement. Spencer will remain with Microsoft in an advisory role through the summer to assist with the transition.
The leadership change likewise includes the departure of Xbox President and Chief Operating Officer Sarah Bond, who is leaving Microsoft “to begin a new chapter,” according to the company. Matt Booty, previously president of game content and studios, has been promoted to executive vice president and chief content officer, and will report to Sharma.
Microsoft’s gaming revenue decreased approximately 9.5% in the December quarter, a steeper decline than initially projected, and the company recorded unspecified impairment charges within the division. This follows the completion of the $69 billion acquisition of Activision Blizzard in 2023, a deal that faced significant regulatory hurdles. Despite the revenue drop, Microsoft’s overall revenue grew nearly 17% in the same period.
Sharma, in an introductory message, indicated a renewed focus on the Xbox console. She stated her intention to “recommit to our core Xbox fans and players,” beginning with the console platform even as also expanding across PC, mobile, and cloud gaming.
The move comes amid ongoing competition from Sony’s PlayStation and Nintendo’s Switch. Microsoft has also faced cost pressures related to tariffs on Xbox hardware, leading to price increases. D.A. Davidson analyst Gil Luria noted that the leadership transition is “appropriate as it comes at a time when the technology underlying gaming is shifting,” and that Microsoft needs leaders equipped to manage the increasing role of AI in game development.