Microsoft announced that Phil Spencer, who has led its Xbox gaming division for 38 years, will retire effective February 23, 2026 and will remain in an advisory role through the summer. In his place, the company promoted AI executive Asha Sharma to executive vice president and chief executive officer of Microsoft Gaming. Sharma, who joined Microsoft in 2024 and previously led product development for the CoreAI platform, will oversee the Xbox brand, studios, and content strategy.
The announcement also noted that Xbox President Sarah Bond is leaving the company and that Matt Booty will become executive vice president and chief content officer, reporting to Sharma. Booty’s promotion comes as Microsoft Gaming has grown to encompass nearly 40 studios, and his role will focus on maintaining the content pipeline and studio relationships.
Microsoft’s shift places a strong emphasis on blending AI expertise with its gaming portfolio. The company’s Xbox division holds about 31% of the global console market share and serves roughly 37 million Game Pass subscribers. By appointing an AI‑focused leader, Microsoft signals its intent to accelerate AI‑driven features across games, cloud gaming, and the Xbox ecosystem, while also recommitting to console hardware and core fan engagement.
"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," Spencer said. "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." "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. We will celebrate our roots with a renewed commitment to Xbox starting with console, which has shaped who we are. It connects us to the players and fans who invest in Xbox, and to the developers who build ambitious experiences for it," Sharma said. "Together, Asha and Matt have the right combination of consumer product leadership and gaming depth to push our platform innovation and content pipeline forward," Satya Nadella said. "My focus is on supporting the teams and leaders we have in place and creating the conditions for them to do their best work. To be clear, there are no organizational changes underway for our studios," Booty said.
Microsoft’s leadership overhaul reflects a strategic pivot toward AI while maintaining a focus on its core console audience. The move is expected to strengthen Xbox’s competitive position against Sony and Nintendo, enhance studio operations through AI‑enabled tools, and reinforce the Game Pass subscription model. No immediate market reaction data were identified in the fact‑check report, indicating that the announcement has yet to trigger a measurable investor response.
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