BREAKING: Phil Spencer is Retiring from Xbox Amid Leadership Shuffle

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Phil Spencer, the head of Microsoft Gaming, will be stepping down on February 23, 2026. This change is part of a larger shift in leadership within the company, also affecting Xbox president Sarah Bond.

Spencer started at Microsoft in 1998 and eventually became the head of Xbox. He took the lead during the Xbox One era, working to improve things after a difficult launch following the success of the Xbox 360. More recently, he oversaw the development of the Xbox Series X/S consoles and led the company through a period of significant studio acquisitions, among other accomplishments.

Sarah Bond, who was widely expected to take over as head of Xbox after Phil Spencer, has stepped down. Microsoft has appointed Asha Sharma, formerly of Microsoft’s CoreAI, as the new CEO of Microsoft Gaming. As part of these changes, Matt Booty, who leads Xbox Game Studios, will be promoted to Chief Content Officer.

New Xbox Leadership

  • CEO of Microsoft Gaming: Asha Sharma
  • Chief Content Officer: Matt Booty

According to internal emails obtained by IGN, Microsoft CEO Satya Nadella praised Phil Spencer, thanking him for his exceptional leadership and collaboration. Nadella noted Spencer’s 38 years with Microsoft – including 12 years heading up the Gaming division – and how he fundamentally changed the company’s approach and results. Spencer also sent a message to Microsoft employees.

Last autumn, I told Satya I was considering retirement and what I wanted to do next. We immediately agreed to plan a smooth transition, prioritize stability, and build on the strong work we’ve already done. Xbox is more than just a company – it’s a passionate community of players, developers, and teams who are dedicated to creating amazing experiences, and it needs a careful, well-considered plan for the future.

Spencer announced that Asha Sharma will be the new CEO of Microsoft Gaming, while he will stay on as an advisor for a few months to ensure a seamless transition. Sharma recently joined Microsoft in 2024, bringing extensive experience from Meta, where she was a VP of Product and Engineering, and Instacart, where she served as COO. She’s also on The Home Depot’s board of directors. In her initial communication, Sharma shared three key priorities for her leadership of Microsoft Gaming.

  • “First, great games. Everything begins here.”
  • “Second, the return of Xbox. We will recommit to our core Xbox fans and players.”
  • “Third, future of play. We are witnessing the reinvention of play.”

In closing her memo, Sharma pledged that as they explore ways to make money and use AI, they won’t prioritize quick gains or fill their games with low-quality, AI-generated content. She emphasized that games are, and will remain, a human art form, built with creativity and the latest technology.

It’s impossible to know what the future holds, but comments from Sharma seem to resonate with many gamers. There’s growing worry about how generative AI will be used in video games, and while Xbox isn’t ruling it out completely, they are promising to maintain high quality. The term “AI slop” suggests low-effort, poorly made content, and that’s a concern they’re addressing.

The gaming industry is facing a lot of challenges and rapid changes right now. Companies like Microsoft, Sony, and Nintendo, as well as all game publishers, are all being affected. We can expect to see further shifts – potentially including changes in leadership – at these major gaming companies in the months and years ahead.

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2026-02-21 00:10