Phil Spencer, CEO of Microsoft Gaming, is retiring, Satya Nadella has announced. Asha Sharma, the President of Microsoft’s CoreAI division is taking over Spencer’s role, while Sarah Bond, the current President of Xbox, is resigning.

“I am long on gaming and its role at the center of our consumer ambition, and as we look ahead, I’m excited to share that Asha Sharma will become Executive Vice President and CEO, Microsoft Gaming, reporting to me,” Nadella says. “Over the last two years at Microsoft, and previously as Chief Operating Officer at Instacart and a Vice President at Meta, Asha has helped build and scale services that reach billions of people and support thriving consumer and developer ecosystems. She brings deep experience building and growing platforms, aligning business models to long-term value, and operating at global scale, which will be critical in leading our gaming business into its next era of growth.”

In a thread on X, Spencer shared his thoughts on Sharma’s new position. “I’m excited for [Asha Sharma] as she steps into the CEO role,” Spencer wrote. “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.”

Alongside Sharma, Matt Booty, the current head of Xbox Game Studios, is getting promoted to Chief Content Officer, and will report to Sharma. Sarah Bond, who like Spencer served as a public face for the Xbox brand and was assumed to be his successor, is leaving Microsoft to “begin a new chapter.” Bond has yet to make a public statement about her resignation.

Spencer joined Microsoft in 1988, and has worked on Xbox since at least 2001. He assumed responsibility for Microsoft’s gaming brand and its various studios and associated subscription products in 2013, before becoming an Executive VP of Gaming in 2017 and later CEO of Microsoft Gaming in 2022. Spencer’s biggest impact on Xbox will likely be remembered as the creation of Game Pass, Microsoft’s “Netflix for Games” and the wave of studio acquisitions Microsoft completed from 2018 to 2022, which included smaller studios like Double Fine and the massive $68.7 billion purchase of Activision Blizzard King.

While Microsoft has plenty of developers and IP to fall back on, it’s struggled to compete with the likes of Sony and Nintendo during the current console generation. Microsoft’s gaming division has gone through widespread layoffs, its revenue continued to fall throughout 2025 and it raised the prices of both its consoles and Game Pass Ultimate, which likely won’t help things going forward. Sharma is in many ways inheriting a broken-down car.

As far as her plans go, Sharma’s email to staff that was included in Nadella’s announcement is light on details. Sharma says she plans to continue developing “great games,” wants to “recommit” to core Xbox fans and “invent new business models and new ways to play.” Whether that’s enough to turn Xbox’s fortunes around remains to be seen.

Update, February 20, 4:52PM ET: Added statement from Phil Spencer shared on X.