In a nutshell

• Phil Spencer retires after decades leading Xbox.
• Sarah Bond resigns, leaving her role as Xbox president.
• Microsoft AI executive Asha Sharma appointed as new Microsoft Gaming CEO.

Microsoft has announced a sweeping leadership shakeup in its gaming division. Phil Spencer, the long-time head of Xbox and a central figure in shaping the brand’s modern identity, has officially retired. Officially effective on February 23, his departure marks the end of an era that saw Xbox evolve through multiple console generations and expand into cloud gaming.

Spencer penned an email to Microsoft staff, which you can read below:

When I walked through Microsoft’s doors as an intern in June of 1988, I could never have imagined the products I’d help build, the players and customers we’d serve, or the extraordinary teams I’d be lucky enough to join. It’s been an epic ride and truly the privilege of a lifetime.

Last fall, I shared with Satya that I was thinking about stepping back and starting the next chapter of my life. From that moment, we aligned on approaching this transition with intention, ensuring stability, and strengthening the foundation we’ve built.

Xbox has always been more than a business. It’s a vibrant community of players, creators, and teams who care deeply about what we build and how we build it. And it deserves a thoughtful, deliberate plan for the road ahead.

Today marks an exciting new chapter for Microsoft Gaming as Asha Sharma steps into the role of CEO, and I want to be the first to welcome her to this incredible team. Working with her over the past several months has given me tremendous confidence. She brings genuine curiosity, clarity and a deep commitment to understanding players, creators, and the decisions that shape our future.

We know this is an important moment for our fans, partners, and team, and we’re committed to getting it right. I’ll remain in an advisory role through the summer to support a smooth handoff.

I’m also grateful for the strength of our studios organization. Matt Booty and our studios teams continue to build an incredible portfolio, and I have full confidence in the leadership and creative momentum across our global studios. I want to congratulate Matt on his promotion to EVP and Chief Content Officer.

As part of this transition, Sarah Bond has decided to leave Microsoft to begin a new chapter. Sarah has been instrumental during a defining period for Xbox, shaping our platform strategy, expanding Game Pass and cloud gaming, supporting new hardware launches, and guiding some of the most significant moments in our history. I’m grateful for her partnership and the impact she’s had, and I wish her the very best in what comes next.

Most of all, to everyone in Microsoft Gaming, I want to say “thank you”. I’ve learned so much from this team and community, grown alongside you, and been continually inspired by the creativity, courage, and care you bring to players, creators, and to one another every day.

I’m incredibly proud of what we’ve built together over the last 25 years, and I have complete confidence in all of you and in the opportunities ahead. I’ll be cheering you on in this next chapter as Xbox’s proudest fan and player.

Adding to the surprise, Sarah Bond, who was recently promoted to Xbox president and widely seen as Spencer’s successor, has also resigned. Bond was a rising leader within Microsoft Gaming, and her exit leaves a significant gap in the company’s leadership structure.

Asha Sharma Steps In as New CEO

Microsoft has appointed Asha Sharma, a seasoned executive from its AI division, as the new CEO of Microsoft Gaming. Sharma’s background in artificial intelligence signals a strategic pivot, with Microsoft likely aiming to integrate AI more deeply into its gaming ecosystem. Her leadership is expected to bring fresh perspectives on innovation, player engagement, and cross-platform experiences.

Sharma outlined three major commitments to guide Xbox’s future, beginning with a renewed focus on “great games.” She emphasized that unforgettable characters, emotional storytelling, and innovative gameplay must remain at the heart of the brand. To support this vision, Sharma pledged to empower studios, invest in iconic franchises, and encourage bold new ideas, even if it means taking risks in new categories and markets.

Her second and third commitments centered on the “return of Xbox” and the “future of play.” Sharma promised to recommit to Xbox’s core fans while maintaining multiformat releases, celebrating the console’s legacy while ensuring seamless experiences across PC, mobile, and cloud. Looking ahead, she stressed that Xbox would embrace innovation without sacrificing artistry, rejecting “soulless AI slop” in favor of games crafted by humans.

Matt Booty’s New Role in Microsoft AI

Meanwhile, Matt Booty, previously head of Xbox Game Studios, has been promoted to a leadership role within Microsoft’s AI division. Booty’s transition highlights Microsoft’s increasing focus on blending gaming with AI-driven technologies, potentially reshaping how games are developed and experienced in the future.