Asha Sharma takes over as CEO of Microsoft Gaming division as company reshuffles leadership

Asha Sharma

• Phil Spencer retires after 40 years at Microsoft, 12 leading Xbox
• Asha Sharma named new CEO of Microsoft Gaming, focusing on AI
• Xbox faces challenges as gaming revenue drops and studios close

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Phil Spencer will retire from Microsoft following nearly four decades at the company, including 12 years leading Xbox. CEO Satya Nadella confirmed the move in a memo to employees, noting that succession planning had been underway since last year.

Spencer took charge of Xbox in 2014 and oversaw significant expansion, including Microsoft’s $75 billion acquisition of Activision Blizzard in 2023. He also championed earlier strategic moves such as the acquisition of Mojang, the studio behind Minecraft.

Under his leadership, Microsoft leaned heavily into subscriptions, cloud gaming and studio acquisitions. Nadella credited Spencer with nearly tripling the size of Microsoft’s gaming business during his tenure.

However, the division faces renewed pressure. Gaming revenue fell about 10% year-on-year in the December quarter, even as overall company revenue grew nearly 17%. Microsoft also recorded an impairment charge in its gaming business earlier this year.

Meanwhile, current-generation Xbox consoles have struggled to match the popularity of rival platforms like PlayStation and Nintendo Switch. The company has also closed several game studios amid cost rationalisation.

Asha Sharma steps in with AI focus

Asha Sharma will succeed Spencer as CEO of Microsoft Gaming, reporting directly to Nadella. She joined Microsoft in 2024 from Instacart and most recently served as president of product in Microsoft’s Core AI division, led by Jay Parikh.

Sharma previously held leadership roles at Meta and Microsoft, spanning product, engineering and marketing. In her message to employees, she pledged to recommit to core Xbox fans and developers while maintaining a strong stance on human creativity in gaming.

"I am stepping into work shaped by generations of artists, engineers, designers, writers, musicians, operators and more who create worlds that have brought joy and deep personal meaning to hundreds of millions of players," she said.

“As monetisation and AI evolve and influence this future, we will not chase short-term efficiency or flood our ecosystem with soulless AI slop,” she wrote, emphasising that games remain an art form built by people.

Matt Booty will continue overseeing game studios and report to Sharma, while Sarah Bond, president and chief operating officer of the Xbox unit, will leave Microsoft.

The transition signals a balancing act ahead: integrating massive acquisitions, strengthening console commitment and weaving AI into gaming — without alienating players who value craftsmanship over automation.