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Microsoft has announced a major leadership transition in its gaming division, as longtime executive Phil Spencer retires after 38 years with the company. The move marks a significant shift for Microsoft Gaming at a time when the video game industry is facing rising costs, strong competition, and rapid technological change driven by artificial intelligence.
Asha Sharma, a Microsoft insider who previously led product development for AI models and services, has been appointed executive vice president and CEO of Microsoft Gaming. In her new role, Sharma plans to refocus on the Xbox console business and “recommit to our core Xbox fans and players,” signaling a renewed emphasis on hardware and player loyalty.
Microsoft’s gaming division has recently faced mounting challenges. The company reported a 9.5% drop in gaming revenue in the December quarter and disclosed impairment charges within the unit. Tariff-related cost pressures, increased competition from Sony’s PlayStation, and uncertain consumer spending have also led Microsoft to raise prices on Xbox hardware. Despite completing its $69 billion acquisition of Activision Blizzard in 2023—one of the largest deals in gaming history—the division continues to battle for console market share and exclusive game dominance.
Spencer will remain in an advisory capacity through the summer to ensure a smooth transition. Microsoft CEO Satya Nadella confirmed that succession planning had been underway since Spencer decided to retire last year.
The leadership shake-up also includes the departure of Sarah Bond, president and COO of Xbox, who is leaving to pursue new opportunities. Meanwhile, Matt Booty has been promoted to executive vice president and chief content officer. Previously head of game content and studios, Booty will now report directly to Sharma.
Industry analysts suggest the transition comes at a pivotal moment, as AI becomes increasingly central to game development and Microsoft positions itself for the next era of gaming innovation.
