Microsoft gaming chief Phil Spencer retires, replaced by ex-Instacart exec Asha Sharma

Phil Spencer, the head of Microsoft's gaming division, is retiring after an impressive 38-year career with the tech giant. His departure coincides with challenges facing the Xbox brand, particularly a notable decline in gaming revenue. In a memo shared with employees, Microsoft CEO Satya Nadella expressed gratitude for Spencer's leadership, acknowledging the significant contributions he made throughout his tenure. The latest financial reports indicate a worrying trend for Microsoft’s gaming revenue, which dropped approximately 10% in the December quarter compared to the previous year. This decline surpassed the company's expectations, even as total revenue soared nearly 17%. Earlier this year, Microsoft reported an unspecified impairment charge related to its gaming operations. Microsoft's ambitious $75 billion acquisition of Activision Blizzard in 2023 was intended to bolster its gaming portfolio, including the release of Call of Duty titles as a cloud gaming service. However, current Xbox console sales have not matched the popularity of competitors like Sony's PlayStation and Nintendo's Switch, leading to the closure of several studios within the company. Spencer, who took the helm of Xbox in 2014, played a pivotal role in tripling the size of Microsoft's gaming business through strategic acquisitions, including the purchase of Mojang, the studio behind Minecraft. Nadella praised Spencer's transformative impact in his memo, highlighting how he helped reshape Microsoft's approach to gaming. Asha Sharma, who joined Microsoft in 2024 from Instacart, is set to succeed Spencer as the new head of gaming, reporting directly to Nadella. Before her current role as president of product in Microsoft's Core AI division, Sharma held significant positions at Meta and Microsoft in product development and marketing. In her message to the gaming team, Sharma emphasized a renewed commitment to Xbox fans and developers. She articulated a vision for the future that prioritizes creativity and artistry in gaming, resisting the urge to prioritize short-term efficiencies or rely on generic artificial intelligence solutions. She stated, "Games are and always will be art, crafted by humans, and created with the most innovative technology provided by us." Matt Booty, who leads Microsoft's gaming studios, will now report to Sharma as executive vice president and chief content officer. Nadella expressed confidence in Sharma and Booty, asserting that their combined expertise would drive innovation and enhance the gaming content pipeline. Meanwhile, Sarah Bond, president and operating chief of the Xbox unit, will be departing from Microsoft, as announced by Nadella.