Phil Spencer Steps Down as Microsoft Gaming CEO, Asha Sharma Takes the Helm

After a 38-year tenure at Microsoft, Phil Spencer is retiring from his position as CEO of Microsoft Gaming. The transition, initially planned last year, will see Asha Sharma, formerly President of Microsoft’s CoreAI division, assume the role of Executive Vice President and CEO of Microsoft Gaming, reporting directly to Microsoft CEO Satya Nadella. This leadership change comes amidst a challenging period for Xbox, with recent revenue declines and the ongoing integration of Activision Blizzard.

A New Era for Microsoft Gaming

Nadella announced the change in a memo to employees on Friday, February 20, 2026, expressing gratitude for Spencer’s leadership and partnership. Sharma’s appointment marks a significant shift, bringing in an executive with a strong background in scaling consumer platforms, having previously held roles at Instacart and Meta CNBC.

Leadership Restructuring

Alongside Sharma’s appointment, Matt Booty has been promoted to Chief Content Officer, reporting to Sharma. Notably, Sarah Bond, the current President of Xbox, is resigning from Microsoft to pursue new opportunities Engadget. Spencer expressed confidence in Sharma’s ability to lead the Xbox communities forward, highlighting her curiosity and commitment to understanding players and creators Engadget.

Recent Performance and Challenges

The leadership transition occurs as Microsoft’s Xbox business faces headwinds. Revenue in the December quarter declined nearly 10%, a steeper drop than anticipated. Microsoft also announced an unspecified impairment charge in its gaming business in January, following the $75 billion acquisition of Activision Blizzard in 2023 CNBC. While the acquisition brought titles like Call of Duty to cloud services, current-generation Xbox consoles have not achieved the same popularity as Sony’s PlayStation or Nintendo’s Switch CNBC.

Spencer’s Legacy and Future Outlook

Phil Spencer joined Microsoft in 1988 and has been instrumental in shaping the Xbox brand since at least 2001. His departure, following those of Chris Young and Thomas Dohmke in 2025, and Charlie Bell earlier in February 2026, signals a period of significant change for the company. Nadella emphasized his confidence in gaming’s central role in Microsoft’s consumer strategy Forbes.

Key Takeaways

• Phil Spencer is retiring after 38 years at Microsoft.
• Asha Sharma will become the new CEO of Microsoft Gaming.
• Sarah Bond is resigning as President of Xbox.
• Matt Booty has been promoted to Chief Content Officer.
• Xbox revenue declined nearly 10% in the December quarter.