Microsoft Gaming Chief Phil Spencer Retires; Asha Sharma, Former Instacart Exec, Steps In

• Xbox revenue fell approximately 10% in Q4, steeper than management expectations, prompting layoffs in the gaming division in January
• Asha Sharma, previously president of product in Microsoft's Core AI business, will become CEO of gaming and reports directly to CEO Satya Nadella
• Sarah Bond, president and COO of Xbox, will leave Microsoft as part of the leadership restructuring

Summary: Microsoft Gaming Leadership Transition

Key Leadership Changes:

Phil Spencer is retiring from Microsoft after 38 years with the company, including 12 years leading the gaming division since 2014. Asha Sharma, who joined Microsoft from Instacart in 2024, will replace him as CEO of Gaming, reporting directly to CEO Satya Nadella. Sarah Bond, Xbox's president and COO, will also depart the company.

Financial Performance:

Xbox business revenue declined nearly 10% in the December quarter year-over-year—a steeper drop than management projected. This occurred despite total Microsoft revenue growing almost 17%. The company announced unspecified layoffs in its gaming division in January.

Business Context:

Microsoft made a $75 billion acquisition of Activision Blizzard to expand its gaming portfolio and has released Call of Duty titles as a cloud service. However, Xbox consoles continue to lag behind Sony's PlayStation and Nintendo's Switch in popularity, and the company has closed several game development studios.

Sharma's Background:

Sharma previously served as COO at Instacart (2021-2024), spent four years as VP of product and engineering at Meta, and had an earlier stint at Microsoft in marketing. Most recently, she led product in Microsoft's Core AI business under former Apple executive Jay Parikh.

Strategic Direction:

Sharma pledged commitment to core Xbox fans and developers, emphasizing that games "are and always will be art, crafted by humans" while rejecting "soulless AI slop." Matt Booty will continue leading Microsoft's gaming studios as EVP and Chief Content Officer, reporting to Sharma.