Sony’s shuttering of Bluepoint Games is this week’s biggest industry story, but it seems Microsoft has already booked next week’s. Sources told IGN that Phil Spencer, the current CEO of Microsoft Gaming, will allegedly retire on February 23rd, with Asha Sharma, President of CoreAI at Microsoft, set to replace him. Sarah Bond, who serves as Xbox president, has also reportedly resigned. Meanwhile, Matt Booty, formerly head of Xbox Game Studios, will be promoted to Chief Content Officer.
In emails sent out to Microsoft staff (which Game File also obtained), CEO Satya Nadella seemingly thanked Spencer for his “extraordinary leadership and partnership. Over 38 years at Microsoft, including 12 years leading Gaming, Phil helped transform what we do and how we do it.”
Spencer reportedly said, “Last fall, I shared with Satya that I was thinking about stepping back and starting the next chapter of my life. From that moment, we aligned on approaching this transition with intention, ensuring stability, and strengthening the foundation we’ve built. Xbox has always been more than a business. It’s a vibrant community of players, creators, and teams who care deeply about what we build and how we build it. And it deserves a thoughtful, deliberate plan for the road ahead.
“Today marks an exciting new chapter for Microsoft Gaming as Asha Sharma steps into the role of CEO, and I want to be the first to welcome her to this incredible team. Working with her over the past several months has given me tremendous confidence. She brings genuine curiosity, clarity and a deep commitment to understanding players, creators, and the decisions that shape our future. We know this is an important moment for our fans, partners, and team, and we’re committed to getting it right. I’ll remain in an advisory role through the summer to support a smooth handoff.”
In her reported email to staff, Sharma said, “My first job is simple: understand what makes this work and protect it. That starts with three commitments. First, great games. Everything begins here. We must have great games beloved by players before we do anything. Unforgettable characters, stories that make us feel, innovative gameplay, and creative excellence.
“We will empower our studios, invest in iconic franchises, and back bold new ideas. We will take risks. We will enter new categories and markets where we can add real value, grounded in what players care about most. I promoted Matt Booty in honor of this commitment. He understands the craft and the challenges of building great games, has led teams that deliver award-winning work, and has earned the trust of game developers across the industry.”
She also allegedly promised something that should excite long-time fans – the “return of Xbox.” “We will recommit to our core Xbox fans and players, those who have invested with us for the past 25 years, and to the developers who build the expansive universes and experiences that are embraced by players across the world. We will celebrate our roots with a renewed commitment to Xbox, starting with the console which has shaped who we are. It connects us to the players and fans who invest in Xbox, and to the developers who build ambitious experiences for it.
“Gaming now lives across devices, not within the limits of any single piece of hardware. As we expand across PC, mobile, and cloud, Xbox should feel seamless, instant, and worthy of the communities we serve. We will break down barriers so developers can build once and reach players everywhere without compromise.
“Third, the future of play. We are witnessing the reinvention of play. To meet the moment, we will invent new business models and new ways to play by leaning into what we already have: iconic teams, characters, and worlds that people love. But we will not treat those worlds as static IP to milk and monetize. We will build a shared platform and tools that empower developers and players to create and share their own stories.”
Interestingly, she also spoke about the impact of AI, and how, “As monetization and AI evolve and influence this future, we will not chase short-term efficiency or flood our ecosystem with soulless AI slop. Games are and always will be art, crafted by humans, and created with the most innovative technology provided by us.”
As for Booty, he said he was “excited to partner with Asha as our next CEO. Our first conversations centered on her commitment to making great games and the role that plays in our overall success. She asks questions, pushes for clarity, and wants our choices grounded in player and developer needs. That mindset matters as the industry around us is changing quickly: how players engage, how games are made, and how business models and platforms evolve.
“We have good reasons to believe in what’s ahead. This organization and its franchises have navigated change for decades, and our strength comes from teams who know how to adapt and keep delivering. That confidence is grounded in a strong pipeline of established franchises, new bets we believe in, and clear player demand for what we are building.”
This major shift in leadership comes at a time when Xbox is in its most bizarre predicament. Despite several high-profile games launching this year, including Forza Horizon 6 in May and Fable this Fall, it’s seen declining hardware revenues with every quarter. Spencer has also faced criticism for shuttering studios such as The Initiative and canceling projects such as Perfect Dark, Everwild, and ZeniMax’s new IP, Blackbird.
That’s not including the closure of developers such as Tango Gameworks (which Krafton later acquired), Arkane Lyon, and Alpha Dog Games, and numerous layoffs. While spearheading efforts such as Game Pass, it too faced scrutiny over rising prices.
Xbox’s next console SoC, reportedly codenamed Magnus, is seemingly targeting a release in 2027. It’s part of an initiative to open up the ecosystem to various OEMs to offer different Xbox configurations at a range of prices. How this will change under Sharma remains to be seen, but maybe it marks the beginning of Xbox’s comeback.
