Phil Spencer, Microsoft's executive vice president and chief executive of gaming, is set to retire from the company after 38 years, a run during which he built the company up as a videogames powerhouse only to see it lose ground in recent years.
Microsoft has promoted Asha Sharma, president of its CoreAI Product unit, to succeed Spencer as head of Microsoft Gaming, effective immediately, according to the company.
Spencer, 58 years old, made the decision to retire last year, Chief Executive Satya Nadella told staff in an email viewed by The Wall Street Journal. He will stay with the company for the next several months through the transition.
Spencer was central to Microsoft's acquisitions of Activision Blizzard and Minecraft, but his departure follows a period in which its gaming division has stumbled. In its latest earnings report in January, quarterly gaming revenue decreased 9%, hurt by sales in its struggling Xbox unit. Xbox's hardware revenue declined 32% year-over-year.
"Phil helped transform what we do and how we do it," Nadella's email to employees said. "I've long admired Phil's unwavering commitment to players, creators, and his team, and I am personally grateful for his leadership and counsel."
In an email to employees, Spencer wrote that last fall he shared with Nadella that had thought about stepping back and "starting the next chapter of my life."
Microsoft's Gaming division has been challenged by competitors such as PlayStation and Nintendo, which has seen wide popularity of its Switch consoles. Analysts have said Microsoft's Xbox consoles and Game Pass subscription service are underperforming and being outmatched by competitors, including smaller, cheaper rivals like the Nex Playground active game system. A portion of Microsoft's Gaming organization was laid off in 2025 as part of broader cuts that affected more than 15,00 workers.
A lifelong gamer, Spencer joined Microsoft in 1988 as an intern while in college. He became general manager of Microsoft Studios in 2003 and has run the company's gaming division for the last 12 years.
During his tenure, Spencer worked to shift the company's emphasis from its Xbox videogame hardware to an operation through which games from a number of studios could be played across a range of devices, and he tied those ambitions to cloud computing.
In 2014, Mojang AB, the creator of the popular Minecraft videogame, approached Spencer about a deal and Microsoft eventually bought the company for $2.5 billion. Minecraft thrived.
In 2022, Microsoft agreed to buy video game heavyweight Activision Blizzard in an all-cash deal valued at about $75 billion, bringing into the fold the maker of Call of Duty, World of Warcraft and Candy Crush. The deal closed in October 2023.
As part of the gaming division shakeup, Matt Booty, executive vice president and chief content officer of Microsoft Gaming, will become executive vice president and chief content officer and report to Sharma.
Sarah Bond, the president and chief operating officer of Xbox, who had been seen internally as a potential successor to Spencer, is also leaving the company. Bond joined in 2017.