Microsoft on Friday put out word that Xbox stalwart Phil Spencer is retiring, in a shakeup of leadership at the tech titan’s video game unit.
Former Instacart chief operating officer Asha Sharma will take over as head of Microsoft Gaming, with Matt Booty becoming executive vice president and chief content officer.
“As we celebrate Xbox’s 25th year, the opportunity and innovation agenda in front of us is expansive,” Microsoft chief executive Satya Nadella said in a message to employees.
“I am long on gaming and its role at the centre of our consumer ambition.”
Changes to the gaming team include Sarah Bond leaving her job as Xbox president “to begin a new chapter” away from Microsoft, according to the company. Booty was previously president of game content and studios at Microsoft, according to his LinkedIn page.
The shakeup comes as cloud computing and artificial intelligence have become priorities at Microsoft, driving revenue growth but also massive spending on infrastructure to power the technology.
“When I walked through Microsoft’s doors as an intern in June of 1988, I could never have imagined the products I’d help build, the players and customers we’d serve or the extraordinary teams I’d be lucky enough to join,” Spencer said in a message to colleagues.
“It’s been an epic ride and truly the privilege of a lifetime.”
Spencer headed the Xbox unit for 12 of his 38 years at Microsoft, nearly tripling the size of the business as video games evolved from packaged software for consoles to subscription services and digital downloads on an array of devices.
Spencer also guided the Xbox team through acquisitions of Activision Blizzard, ZeniMax, and Minecraft.
Xbox boasts more than 500 million monthly users and a vast stable of game studios, along with a subscription gaming service.
“We are witnessing the reinvention of play,” Sharma said in a blog post announcing the leadership changes.
“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.”
Sharma said she would renew focus on the Xbox console, aiming to “recommit to our core Xbox fans and players”.
Microsoft Gaming has been grappling with tariff-induced cost pressures, strong competition and uncertain consumer spending, prompting price rises on Xbox hardware.
Last month, Microsoft reported that its gaming revenue fell around 9.5 per cent in the December quarter, and it recorded undisclosed impairment charges in the division.
Microsoft had closed its $69 billion deal for “Call of Duty” maker Activision Blizzard in 2023, swelling its heft in the video-gaming market after heavy regulatory scrutiny.
The company’s gaming unit contends with robust competition from Sony’s PlayStation, particularly regarding console market share and exclusive game offerings.
“Microsoft’s leadership transition is appropriate as it comes at a time when the technology underlying gaming is shifting. As AI becomes a bigger element in game development, Microsoft needs a new generation of leaders to manage through this transition,” said D.A. Davidson analyst Gil Luria.
