Phil Spencer is stepping down as CEO of Microsoft Gaming after a 38-year career at the company, with Asha Sharma set to replace him, Microsoft announced on February 20, 2026. The change in leadership comes as Microsoft’s Xbox business navigates a challenging market and increased competition.
Sharma, currently holding the title of Executive Vice President and CEO, Microsoft Gaming, previously served as Chief Operating Officer at Instacart and a Vice President at Meta. According to Satya Nadella, Chairman and CEO of Microsoft, Sharma’s experience in scaling services reaching billions of users will be “critical in leading our gaming business into its next era of growth.” Nadella stated Sharma will report directly to him.
The transition as well sees Matt Booty promoted to Executive Vice President and Chief Content Officer, also reporting to Sharma. Booty’s leadership has overseen the expansion of Microsoft Gaming to include nearly 40 studios encompassing Xbox, Bethesda, Activision Blizzard, and King, responsible for franchises such as Halo, Call of Duty, and Candy Crush.
Spencer’s departure follows a period of significant expansion for Xbox through acquisitions, including Activision Blizzard, and a substantial investment in cloud gaming. But, the timing of the leadership change coincides with reported challenges for the Xbox business, though specific sales figures were not disclosed in the announcement.
Sharma’s background is in artificial intelligence, according to reports, and she is expected to bring a new perspective to Microsoft’s gaming strategy. Nadella highlighted her ability to align business models with long-term value creation as a key factor in her selection.
Microsoft currently reaches over 500 million monthly active users through its gaming division, and remains a major publisher across multiple platforms. The company’s gaming initiatives build upon a history dating back to the early days of Windows, with titles like Flight Simulator predating the operating system itself.
As of February 24, 2026, Microsoft has not detailed specific plans for Sharma’s initial priorities as CEO, nor has Spencer publicly commented on his future plans following his retirement.
