Phil Spencer Retires as Microsoft Names AI Executive Asha Sharma as Gaming CEO in Xbox Shake-Up

Microsoft named AI executive Asha Sharma to lead its Xbox and gaming business, replacing Phil Spencer, and will recommit to console users after years of developing products for mobile and PC players.

Spencer, who has run the Xbox business since 2014 and was named gaming CEO in 2022 is retiring, the company said. Xbox President Sarah Bond will also leave. Xbox games studios chief Matt Booty will become chief content officer, reporting to Sharma.

Sharma, who previously held roles at Instacart and Meta Platforms, was chosen for her consumer expertise and will serve as the chief executive officer of gaming, Microsoft CEO Satya Nadella said Friday in a blog post.

In recent years, the company has focused significant effort on broadening beyond its core console audience, aiming at PC and mobile gamers with a spree of acquisitions, including the $69 billion purchase of Activision Blizzard. Those moves and others alienated long-time Xbox devotees. Meanwhile, the mobile gaming market slowed and Microsoft's plans there have lagged.

Microsoft has laid off more than 2,500 gaming employees since 2024, according to industry tracker Obsidian. The company has shuttered studios including Arkane Austin, the Initiative and Tango Gameworks, and canceled games that were in the works for years. The company also angered gamers with deals to bring its most significant console games to rivals devices from Sony and Nintendo.

Sharma wants to reverse some of the slide.

“We will recommit to our core Xbox fans and players, those who have invested with us for the past 25 years, and to the developers who build the expansive universes and experiences that are embraced by players across the world,” Sharma said in an email to staff. “We will celebrate our roots with a renewed commitment to Xbox starting with console, which has shaped who we are.”

Sharma has been overseeing Microsoft's efforts at working with a wide array of AI models, as well as focusing on AI agents, applications and developer tools.

Early last year, when the industry was rocked by the rapid interest in China's DeepSeek model, Sharma led about 100 engineers working around the clock to respond to Nadella's demand for a quick response, testing the software and releasing a version for Microsoft's Azure cloud customers within days.

As chief operating officer at Instacart, she played a key role in that company's IPO and focus on profitability, according to her LinkedIn profile. She spent four years in product leadership roles at Meta. Earlier in her career, she spent two years in marketing at Microsoft before leaving in 2013.

She rejoined Microsoft two years ago as president Core AI product.

Shares of Microsoft closed little changed at $397.23 Friday in New York.

The moves follow a grim decade for Xbox. After a decade of healthy competition with Sony's PlayStation and Nintendo consoles, Spencer acknowledged that 2013's Xbox One “lost the worst generation to lose.” Since then, Xbox sales have stalled.

“We've been selling consoles to the same 200 million global households,” Spencer told Bloomberg Businessweek in 2024.

Spencer, who joined Microsoft in 1988 as an intern and moved to Xbox in 2001, undertook several acquisitions to grow the business, splashing $10 billion on Minecraft maker Mojang Studios and Bethesda Softworks even before the Activision deal added Candy Crush and Call of Duty.

The intention was to add games to the Game Pass subscription service, which could potentially insulate Xbox from its risky console business. But putting top titles on the service, instead of selling them at a premium $70, cut into sales of higher-margin games like Call of Duty.

The approach initially attracted a large audience but growth slowed, pushing Microsoft to raise the monthly Game Pass price by 50 percent.

Amy Hood, Xbox's chief financial officer, has pressed the Xbox division to make more money, Bloomberg has reported. Recently, executives set a goal of 30 percent “accountability margins” – a term for profitability.

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