Phil Spencer is retiring as CEO of Microsoft Gaming after 38 years with the company, officials announced Friday, with Asha Sharma set to succeed him. Sharma, who joined Microsoft in 2024, will grow executive vice president of gaming and report directly to Microsoft CEO Satya Nadella.
Nadella revealed Spencer’s planned departure last year, with the transition formally announced to staff on February 16, 2026. Sharma’s appointment marks a significant shift for the gaming division, as she moves from her role as president of product development within Microsoft’s CoreAI group. Prior to joining Microsoft, Sharma served as chief operating officer at Instacart and held a vice president position for product development at Meta.
Spencer’s exit follows the departures of other key Microsoft figures in recent years, including former business development head Chris Young and GitHub CEO Thomas Dohmke. Charlie Bell, head of Microsoft’s security systems, similarly transitioned to a different role within the company, though he remains with Microsoft.
The leadership change comes amid a period of fluctuating performance for Microsoft’s gaming division. While the company’s overall revenue increased by 17% in the fourth quarter of 2025 compared to the previous year, video game revenue experienced a 10% decline between December 2024 and December 2025, a result that reportedly exceeded the company’s expectations, according to CNBC.
Microsoft’s recent acquisition of Activision Blizzard in 2023, bringing titles like Call of Duty to its cloud gaming service, has been a major strategic move. However, the Xbox system continues to face strong competition from Sony’s PlayStation and Nintendo’s Switch, impacting Microsoft’s market share. The company has also closed several of its internal gaming development studios.
In her first memo as CEO, Sharma outlined her vision for the future of Xbox, though details of that memo were not immediately available.