After more than a decade in charge of Xbox, Phil Spencer is retiring from his position at the top of Microsoft’s Gaming Division, as laid out in a story from IGN. Sarah Bond, the president of Xbox, is also leaving the company.

Asha Sharma previously president of Microsoft’s CoreAI product, has been promoted to CEO of Microsoft Gaming. Xbox Game Studios head Matt Booty is being promoted to chief content officer. Spencer will remain at Xbox through the summer in an advisory role.

“Last fall, I shared with Satya [Nadella, Microsoft CEO] that I was thinking about stepping back and starting the next chapter of my life,” Spencer said in an email to employees. “From that moment, we aligned on approaching this transition with intention, ensuring stability, and strengthening the foundation we’ve built. 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.

“Today marks an exciting new chapter for Microsoft Gaming as Asha Sharma steps into the role of CEO, and I want to be the first to welcome her to this incredible team. Working with her over the past several months has given me tremendous confidence. She brings genuine curiosity, clarity and a deep commitment to understanding players, creators, and the decisions that shape our future. We know this is an important moment for our fans, partners, and team, and we’re committed to getting it right. I’ll remain in an advisory role through the summer to support a smooth handoff.”

Sharma laid out her hopes for the future of Xbox in her own email, in which she said she wants to spearhead the “return of Xbox,” and also said that she wants to commit to human-made work and reject “soulless AI slop.” The email read as follows:

My first job is simple: understand what makes this work and protect it. That starts with three commitments. First, great games. Everything begins here. We must have great games beloved by players before we do anything. Unforgettable characters, stories that make us feel, innovative game play, and creative excellence. We will empower our studios, invest in iconic franchises, and back bold new ideas. We will take risks. We will enter new categories and markets where we can add real value, grounded in what players care about most. I promoted Matt Booty in honor of this commitment. He understands the craft and the challenges of building great games, has led teams that deliver award-winning work, and has earned the trust of game developers across the industry.

Second, the return of Xbox. 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.

Third, future of play. We are witnessing the reinvention of play. To meet the moment, we will invent new business models and new ways to play by leaning into what we already have: iconic teams, characters, and worlds that people love. But we will not treat those worlds as static IP to milk and monetize. We will build a shared platform and tools that empower developers and players to create and share their own stories.

As monetization and AI evolve and influence this future, we will not chase short-term efficiency or flood our ecosystem with soulless AI slop. Games are and always will be art, crafted by humans, and created with the most innovative technology provided by us.

Booty said in his own email to staff that he was “excited” to work with Sharma and was encouraged by his early conversations with the incoming CEO.

“Our first conversations centered on her commitment to making great games and the role that plays in our overall success,” Booty wrote. “She asks questions, pushes for clarity, and wants our choices grounded in player and developer needs. That mindset matters as the industry around us is changing quickly: how players engage, how games are made, and how business models and platforms evolve.

“We have good reasons to believe in what’s ahead. This organization and its franchises have navigated change for decades, and our strength comes from teams who know how to adapt and keep delivering. That confidence is grounded in a strong pipeline of established franchises, new bets we believe in, and clear player demand for what we are building.”

Spencer has been with Microsoft since 1988 and has been with the Xbox brand since 2001, helping to launch the original console against the PS2 and GameCube 25 years ago. He was promoted to the head of Xbox in 2014 shortly after the launch of the Xbox One, and has remained a face of the brand for 12 years, operating as the CEO of Microsoft Gaming since 2022.

The departure comes after a long struggle to put Xbox back on top of the console gaming ecosystem. Alongside milestones like Game Pass and acquiring Activision Blizzard there have also been plenty of game delays, cancelations, layoffs, and studio closures. Soft sales of the Xbox Series X/S compared to the PlayStation 5 and Switch in the most recent generation pushed Microsoft to take many once-exclusive games multiplatform, doing what was once unthinkable and bringing Halo to Sony’s rival gaming platform. 

The Xbox division has reportedly been under significant pressure from Microsoft to reach abnormally high profit margins, which some speculate has played a part in the rise of prices for Xbox consoles and subscription services in recent years.

Update: 2/20/26, 4:00 p.m. ET: Spencer posted a public statement on his X account

I’m excited for @asha_shar as she steps into the CEO role. She’s joining an incredible group of people; teams full of talent, heart, and a deep commitment to the players they serve. Watching her lean in with curiosity and a real desire to strengthen the foundation we’ve built gives me confidence that our Xbox communities will be well supported in the years ahead.

Thinking back to my start as an intern in 1988, I never could have imagined the path ahead. I’ve been lucky to work with so many passionate creators, partners, colleagues, and players across the industry; people who challenged me, taught me, and made this work full of joy and wonder.

Thank you to everyone who’s been part of this chapter. This community has meant more to me than I can say.

From here, I’ll keep doing what’s always mattered so much to me: cheering on the teams pushing this industry forward and playing alongside this incredible community. I’ll see you online.