Microsoft’s long-serving gaming chief Phil Spencer has stepped down after 12 years leading the Xbox division.
His successor, Asha Sharma, has promised a “return of Xbox” as the company faces declining console sales and internal restructuring.
Spencer, who spent more than 38 years at Microsoft, oversaw some of the company’s most significant gaming milestones. During his tenure, Microsoft completed the $68.7 billion acquisition of Activision Blizzard, the publisher behind global franchises like Call of Duty and Overwatch.
His resignation marks the end of a defining era for Xbox, during which Microsoft aggressively expanded its gaming footprint through studio acquisitions and subscription services.
Asha Sharma promises “return of Xbox”
Sharma, who previously led Microsoft’s CoreAI division and held senior roles at Meta and Instacart, will now head Microsoft Gaming.
In her introductory message, she pledged the “return of Xbox,” though she did not specify when new physical hardware might be released.
She emphasized a renewed commitment to multi-platform gaming, stating that gaming “now lives across devices, not within the limits of any single piece of hardware.”
“We will break down barriers so developers can build once and reach players everywhere without compromise,” Sharma said.
Her remarks signal a strategy that may prioritize accessibility and cross-platform reach over traditional console exclusivity.
More resignations and promotions
Spencer’s departure was not the only major leadership shake-up.
Sarah Bond, President of Xbox, also resigned. Meanwhile, Matt Booty was promoted to Executive Vice President and Chief Content Officer.
Booty said that “no organizational changes are underway” at Xbox Studios and stressed that his focus remains on supporting existing teams and leadership structures.
Falling console sales add pressure
The leadership changes come during a challenging period for Xbox hardware.
According to Mat Piscatella, a senior director at market research firm Circana, Xbox Series console sales fell 70% year-over-year during the 2025 holiday period.
By comparison, sales of the PlayStation 5 declined 40% year-over-year. Meanwhile, combined sales of the newly released Nintendo Switch 2 and Nintendo Switch were down 10% compared with Switch 1 sales alone during the same period last year.
These figures highlight mounting competition and shifting consumer trends in the global gaming market.
Recent years have also been marked by workforce reductions within Microsoft’s gaming division.
In November 2024, 650 roles across teams were cut under Spencer’s leadership. The layoffs reflected broader restructuring efforts as the company integrated newly acquired studios and adjusted to market realities.
