Microsoft’s gaming division is heading into a new era.
After nearly four decades at the company and 12 years leading Xbox, Phil Spencer is retiring. In a major leadership shake-up, Sarah Bond, president of Xbox, is also stepping down.
Microsoft CEO Satya Nadella confirmed the news in a memo to staff. He said succession planning had been underway since last year, with Spencer to remain in an advisory role through the summer to support the transition.
However, day-to-day leadership of Microsoft Gaming now shifts to Asha Sharma, who is currently president of Microsoft’s CoreAI product division.
It’s a significant pivot considering Spencer has been the public face of Xbox since 2014.
He oversaw the launch of the Xbox Series X and Series S and the expansion of Xbox Game Pass. In addition, he managed landmark acquisitions including Mojang, ZeniMax Media and Activision Blizzard. His tenure reshaped Xbox’s strategy around subscriptions, cloud gaming and cross-platform play.
Sharma, by contrast, comes from a platform and AI background. She previously held senior roles at Meta and Instacart before rejoining Microsoft in 2024 to lead CoreAI. Nadella described her as having “deep experience building and growing platforms” — a signal that AI and long-term ecosystem strategy could play a bigger role in Xbox’s future.
In her first internal memo, Sharma outlined three priorities: delivering great games, reaffirming Xbox’s identity — starting with console — and shaping “the future of play.” That commitment to console is notable at a time when Microsoft has leaned heavily into Game Pass and cloud streaming. This comes amid ongoing speculation about what the next generation of Xbox hardware might look like.
Spencer’s retirement marks the end of an era. He joined Microsoft as an intern in 1988. Then he worked across products, including Encarta and Microsoft Money, and moved into Xbox in 2001. Under his leadership, Xbox evolved from a hardware-first business into a broader gaming platform spanning PC, console and cloud.
With Bond also departing and Matt Booty stepping into an expanded role as EVP and chief content officer, Microsoft’s gaming leadership is being reshaped all at once.
The direction Sharma sets over the next year could define whether Xbox doubles down on hardware. Alternatively, the company could lean further into AI-driven services or redraw the boundaries of what the brand stands for.
Either way, the transition signals that Xbox’s next chapter won’t simply be business as usual.
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