Microsoft’s head of gaming, Phil Spencer, is leaving the software program maker following a 38-year tenure, as the corporate’s Xbox enterprise faces elevated challenges.
“Final 12 months, Phil Spencer made the choice to retire from the corporate, and since then we have been speaking about succession planning,” Microsoft CEO Satya Nadella wrote in a memo to staff that was printed on Friday. “I wish to thank Phil for his extraordinary management and partnership.”
Spencer’s exit follows the departures of enterprise growth chief Chris Younger and GitHub CEO Thomas Dohmke in 2025. Charlie Bell, who had been Microsoft’s most high-ranking safety chief, switched to a person contributor function earlier this month.
Income from video video games at Microsoft declined about 10% within the December quarter from a 12 months earlier, a steeper drop than the corporate anticipated, whereas whole income grew almost 17%. Microsoft introduced an unspecified impairment cost in its gaming enterprise in January.
The corporate made a $75 billion guess to broaden its video games enterprise with the 2023 acquisition of Activision Blizzard, and it launched Name of Obligation titles as a cloud service. However present technology Xbox consoles have not been as common as Sony’s PlayStation or Nintendo’s Change, and Microsoft has shuttered studios engaged on new video games.
Nadella mentioned within the memo that Spencer, who took cost of Xbox in 2014 after working the corporate’s gaming studios, almost tripled Microsoft’s gaming enterprise, partially by way of acquisitions like Activision Blizzard. Spencer additionally pushed for Microsoft to take over Minecraft developer Mojang.
“Over 38 years at Microsoft, together with 12 years main Gaming, Phil helped remodel what we do and the way we do it,” Nadella wrote.
After Nadella grew to become CEO in 2014, Sony was promoting extra consoles than Microsoft, and traders had floated the thought of spinning out shopper belongings equivalent to Xbox. Analyst Rick Sherlund of Nomura estimated that the division may lose greater than $1 billion for the 12 months.
“The query is, will we go ahead with Xbox?” Spencer mentioned in a 2020 interview with gaming web site Shacknews. Spencer mentioned he persuaded Nadella to carry {hardware}, software program and game-development teams into one group.
Asha Sharma, who joined Microsoft in 2024 from Instacart, will take over for Spencer, turning into CEO of gaming and reporting to Nadella. Till now, she has been president of product in Microsoft’s Core AI enterprise, which former Meta government Jay Parikh runs. Earlier than arriving at Instacart in 2021 and serving as working chief, Sharma spent 4 years as a vp of product and engineering at Meta and two years in advertising at Microsoft.
“We’ll recommit to our core Xbox followers and gamers, those that have invested with us for the previous 25 years, and to the builders who construct the expansive universes and experiences which are embraced by gamers the world over,” Sharma wrote in a message to Microsoft’s gaming staff.
She has labored on synthetic intelligence merchandise such because the Foundry for incorporating AI fashions into third-party functions.
“As monetization and AI evolve and affect this future, we is not going to chase short-term effectivity or flood our ecosystem with soulless AI slop,” Sharma wrote. “Video games are and all the time can be artwork, crafted by people, and created with probably the most progressive expertise offered by us.”
Sharma mentioned Microsoft will renew its dedication to console gaming. Microsoft’s unique Xbox got here out in 2001.
Matt Booty, head of Microsoft’s gaming studios, will report back to Sharma as government vp and chief content material officer.
“Collectively, Asha and Matt have the proper mixture of shopper product management and gaming depth to push our platform innovation and content material pipeline ahead,” Nadella wrote.
Sarah Bond, president and working chief of the Xbox unit, will go away Microsoft.
“I’ve had the privilege of spending time with Asha over the previous few weeks as we have deliberate for this transition, and I’ve seen firsthand her deep dedication to our gamers, builders, and model,” Bond informed Xbox staff in a message she additionally posted to LinkedIn. “She brings deep expertise and commerce expertise, together with a powerful monitor file of constructing and scaling platforms that the world makes use of. Xbox deserves this.”
Bond and Spencer each mentioned they may advise Sharma on the transition.
WATCH: Microsoft remains to be a purchase for the long term investor, says CFRA’s Sam Stovall
