Phil Spencer is stepping down as head of Microsoft's gaming division after nearly 40 years at the company. His place will be taken by Asha Sharma, who is responsible for the development of AI

We talk about unexpected changes at Microsoft

What's happened

On Friday, February 20, IGN, citing sources, reported that the head of Microsoft Gaming, Phil Spencer, is resigning. Asha Sharma, who until now was the director of product at Microsoft CoreAI, will become the new head of the gaming division from Monday. This department is engaged in the development of artificial intelligence. In addition, Sarah Bond, president of the manufacturer of video game consoles Xbox, will leave Microsoft. Matt Booty, head of game publisher Xbox Game Studios, part of Microsoft Gaming, has been promoted to head of content for Xbox.

IGN obtained emails written by Microsoft CEO Satya Nadella, as well as Spencer, Sharma and Booty. Soon the company confirmed the information to the publication and published news about the reshuffle with the texts of the emails. Sarah Bond, apparently, did not write a goodbye letter.

Phil Spencer, in particular, said that last fall he discussed with Nadella his plans to “retire and start a new stage in life.” Then they agreed on Spencer's departure. To ensure a smooth transition, Spencer will assist Sharma in an advisory capacity until the end of the summer.

Asha Sharma promised in her letter that Microsoft Gaming would focus on three things: creating “great games,” “bringing back Xbox,” and “reimagining video games,” including creating new business models and using artificial intelligence. Sharma separately emphasized that she is not going to chase short-term benefits and “flood the ecosystem with a soulless AI slop .”

Who is Phil Spencer and what is he remembered for?

Spencer, 58, joined Microsoft as an intern in 1988. When the company released its first video game console, the Xbox, in 2001, he joined the gaming division and began working with developers from European studios whose games were published by Microsoft.

In 2014, Satya Nadella appointed Spencer as the “chief of everything” at Xbox: he became the head of Xbox and the Xbox Live, Xbox Music and Xbox Video services. In addition, Spencer headed the game developer Microsoft Studios, which was later renamed Xbox Game Studios.

As the de facto head of Microsoft's video game department, Spencer was remembered for two high-profile transactions. In September 2020, Microsoft bought ZeniMax Media, the parent company of video game publisher Bethesda Softworks. For $7.57 billion, Microsoft gained control of the Fallout, Doom and The Elder Scrolls franchises. At that time it was the largest deal in the gaming industry.

In January 2022, Microsoft merged its console and video game development and publishing businesses into Microsoft Gaming, which Spencer led until Friday. His first step in his new post was the announcement of the purchase of video game publisher Activision Blizzard for $68.7 billion. Thus, Microsoft had the Call of Duty, World of Warcraft, Diablo and Candy Crush franchises at its disposal. The US Federal Trade Commission tried to challenge the deal, but Microsoft won the case.

Thanks to these deals, memes began to be made about Spencer, the main one in Russian sounding like “Phil ****” (shits). There was also a video with “broad Phil” - similar to “broad Putin”.

Spencer's other major achievement was the launch of Xbox Game Pass, a Netflix-like subscription service for Xbox and personal computers. For a monthly fee (from $10 to $30 depending on the tariff), players get access to an updated catalog of games. Some games are included in the subscription immediately on the day of release, but most end up in the catalog some time after release. Typically, high-budget games sell for $70–$80.

However, there are doubts about the success of the subscription model. In 2025, Microsoft reported record profits for Game Pass, but the press questioned the sustainability of the business model.

What was the reaction

Rumors about Spencer's possible resignation appeared in July 2025. Then insiders wrote that he would leave his post after the release of the next generation Xbox, but so far the console had not even been announced. Sarah Bond was considered Spencer's likely successor.

Forbes calls Sharma's appointment "extremely unexpected" - as is the fact that she was chosen over Bond. The publication notes that over the last two generations of game consoles, Xbox has lost sales to competitors from Sony and Nintendo, PlayStation and Switch. IGN reported that November 2025 was the worst sales year ever for Xbox - with rising prices .

At the same time, Microsoft has completely stopped publishing accurate data on console sales. However, the company's latest quarterly report reported that console sales were down 32% compared to the same period a year earlier. According to Forbes, the console division remained profitable, but was "hardly making huge amounts of money compared to the rest of" Microsoft.

The gaming publication Kotaku collected reactions on social networks to the news of the resignation of Spencer and Bond. In short, the message was received with alarm. Some are literally burying Xbox, while others are waiting for a series in the spirit of Descendants about what happened at Microsoft in the last few months after Spencer told Nadella about his desire to leave. One of the users draws attention to the fact that only Phil Spencer mentions Sarah Bond in his letter. In his opinion, this, combined with Bond's silence, indicates that the story of her dismissal was “unpleasant” and will soon come out.