Phil Spencer steps down after 40 years - Head of AI takes over as head of Xbox

Philipp Rüegg

21.2.2026

Translation: machine translated

After almost 40 years at Microsoft, Phil Spencer is stepping down as head of the gaming division. Head of Xbox Sarah Bond is also stepping down. The previous president for AI products takes over.

Xbox is facing perhaps the biggest upheaval of all time. After twelve years as head of Microsoft's gaming department, Phil Spencer is retiring. His career began in 1988 as an intern at Microsoft. He was the figurehead of Xbox for many years and was held in high regard in the industry and the Community.

Sarah Bond, who took over as head of Xbox in 2023, is also stepping down. Matt Booty, Head of Xbox Game Studios, is promoted to Chief Content Officer. Spencer's successor is Asha Sharma, the previous President and Head of Microsoft's Core AI product. She only joined the company two years ago.

The leadership changes come at a turbulent time. After the Xbox One, the Xbox Series remains the second console generation to fall far behind the competition in terms of sales. Microsoft has fuelled classic console exclusivity for years with numerous studio acquisitions. After the acquisition of Activision Blizzard King for almost 70 billion US dollars and the declining success of the Xbox, a rethink took place. Under the motto: «Everything is an Xbox», Microsoft is increasingly focussing on multiplatform releases instead of exclusivity.

It will be interesting to see which direction Sharma takes. AI is a red rag for many game fans and studios. Sharma's first statement sounds reassuring: «We will rededicate ourselves to our Xbox fans who have been loyal to us for 25 years and to the developers who create the expansive universes and experiences that gamers around the world love.»

She also strikes a conciliatory tone on the topic of AI. «While monetisation and AI will continue to evolve and influence the future, we will not strive for short-term efficiency or flood our ecosystem with soulless AI junk. Games are and will remain art, created by humans and developed with the most innovative technologies we make available», Sharma said in her message to employees.

An era comes to an end

With Spencer's retirement, one of the most renowned figures in the gaming industry is stepping down. He has been with the company since the creation of the first Xbox generation. Microsoft appointed Spencer as head of Xbox in 2014. One of his first big decisions was to separate the Kinect device from the Xbox One bundle. Microsoft thus lowered the price by 100 US dollars in order to be on a par with the Playstation 4 at launch. Without this price reduction, the Xbox One would probably have been even further behind.

His greatest legacy, however, will be the takeover of Activision Blizzard King. This may also have cost him his head. Even if Spencer and Microsoft CEO Stya Nadella sound conciliatory, the massive investments have increased the pressure on the Xbox division. Spencer was unable to turn the tide decisively.

Philipp Rüegg

Senior Editor

Philipp.Rueegg@digitecgalaxus.ch

As a child, I wasn't allowed to have any consoles. It was only with the arrival of the family's 486 PC that the magical world of gaming opened up to me. Today, I'm overcompensating accordingly. Only a lack of time and money prevents me from trying out every game there is and decorating my shelf with rare retro consoles. more

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