Microsoft’s gaming division is entering a new era following the retirement of Phil Spencer and the appointment of Asha Sharma as the new CEO of Microsoft Gaming. Sharma, along with newly promoted Chief Content Officer Matt Booty, outlined their initial plans in internal memos, signaling a renewed focus on the Xbox platform and a cautious approach to artificial intelligence integration. The memos, initially reported by The Verge, reveal a commitment to both hardware and content as Microsoft navigates a rapidly evolving gaming landscape.
The leadership shift comes as Microsoft celebrates the 25th anniversary of Xbox, boasting over 500 million monthly active users and a leading position in game publishing across multiple platforms, as highlighted by Microsoft Chairman and CEO Satya Nadella in a company-wide announcement on February 20, 2026. Nadella’s statement emphasized the company’s long-term commitment to gaming and its central role in Microsoft’s consumer ambitions.
Whereas Booty’s memo focused primarily on the importance of games and player experience, Sharma’s communication detailed three core pillars for the future of Microsoft Gaming: “Great Games,” “The Return of Xbox,” and “The Future of Gaming.” The emphasis on a “return of Xbox” is particularly noteworthy, signaling a renewed dedication to the console experience alongside the company’s existing cross-platform strategy.
A Renewed Focus on Xbox Hardware
Sharma explicitly stated a commitment to celebrating Microsoft’s roots with a renewed focus on Xbox consoles. “We will celebrate our roots with a renewed commitment to Xbox, starting with the consoles that have defined us,” she wrote in the memo. This statement addresses concerns among some gamers about Microsoft potentially shifting away from dedicated hardware in favor of cloud gaming and cross-platform accessibility. But, Sharma also clarified that the company will continue to pursue its cross-platform strategy, ensuring games are available on a variety of devices.
The timing of this renewed console focus aligns with industry expectations for the next generation of gaming hardware. While no specific announcements have been made, industry analysts previously anticipated the next Xbox generation around 2027. GeekWire’s analysis suggests that supply chain issues, specifically a global memory crisis, may push back the release of new consoles from both Microsoft and Sony by one to two years.
Navigating the AI Landscape
Sharma also addressed the growing role of artificial intelligence in game development, a topic that has sparked debate within the gaming community. She emphasized a commitment to using “modern technologies” but stressed the importance of maintaining the human element in game creation. “We will ensure that our games remain art created by people,” Sharma stated. Perhaps most significantly, she added, “We will not pursue short-term efficiency at the expense of quality, nor will we flood the ecosystem with soulless AI scrap.” This sentiment, described as avoiding “AI Slop” in the memo, suggests a cautious approach to AI integration, prioritizing artistic integrity and quality over rapid, AI-driven development.
The appointment of Asha Sharma, previously President of Microsoft’s CoreAI product, suggests the company intends to leverage AI strategically, but with a clear understanding of the potential pitfalls. Business Insider reported that Sharma’s background in scaling services that reach billions of people will be crucial in leading Microsoft Gaming’s next phase of growth.
Matt Booty’s promotion to Chief Content Officer underscores the importance of content in Microsoft’s gaming strategy. He will perform closely with Sharma to drive platform innovation and the content pipeline forward, overseeing nearly 40 studios including Xbox, Bethesda, Activision Blizzard, and King, responsible for franchises like Halo, Call of Duty, and Candy Crush.
Looking ahead, the gaming industry will be watching closely to see how Sharma and Booty translate these initial statements into concrete actions. The balance between embracing new technologies like AI and preserving the artistic heart of game development will be a key challenge for Microsoft Gaming in the years to come. The company’s commitment to the Xbox platform, coupled with its expansive content portfolio, positions it for continued success, but navigating the evolving landscape will require a thoughtful and deliberate approach.
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