Microsoft has announced a seismic leadership change within its gaming division, appointing AI executive Asha Sharma as the new CEO of Gaming. This move signals a significant strategic departure for the Xbox brand as it navigates the departure of several longtime leaders and a period of intense internal restructuring. Sharma succeeds Phil Spencer, who is retiring after leading the Xbox business since 2014. The transition also sees the exit of Xbox President Sarah Bond, while Matt Booty, the former head of game studios, shifts into the role of Chief Content Officer reporting directly to Sharma.
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Asha Sharma returns to the gaming fold with a diverse and high-pressure pedigree. Having previously served as Chief Operating Officer at Instacart and held leadership roles at Meta, she rejoined Microsoft two years ago as President of Core AI Product. Her reputation for rapid execution was solidified early last year when she led a team of engineers to integrate support for China’s DeepSeek model into Azure within days of its viral emergence. Microsoft CEO Satya Nadella cited her deep consumer expertise and technical agility as the primary reasons for her appointment during this critical juncture for the brand.
Sharma’s arrival coincides with a period of soul-searching for Xbox. Under Spencer’s tenure, Microsoft spent nearly $90 billion on acquisitions—including the record-breaking $69 billion purchase of Activision Blizzard—to pivot toward a “mobile and PC first” strategy. This expansion aimed to move beyond the traditional console market, which Spencer famously noted had “lost the worst generation to lose” during the Xbox One era. However, this diversification alienated many core console devotees, particularly after Microsoft began porting its most prestigious exclusives to rival platforms from Sony and Nintendo.
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The financial pressure on the division has been mounting. Despite the massive library of titles added to the Game Pass subscription service, the model of launching premium games directly into the service cannibalized high-margin sales of franchises like Call of Duty. In response, CFO Amy Hood has reportedly pushed for “accountability margins” of 30%, leading to a series of difficult decisions. Since 2024, the gaming division has laid off over 2,500 employees and shuttered celebrated studios like Tango Gameworks and Arkane Austin.
In a direct email to staff, Sharma made it clear that her immediate goal is to “stop the slide” and restore faith among the brand’s most loyal supporters. She pledged to recommit to the core console players who have invested in the ecosystem over the past 25 years. By promising to celebrate the brand’s roots and prioritize the console experience that “shaped who we are,” Sharma is signalling an end to the era of prioritizing mobile growth over the dedicated hardware experience. With the industry watching closely, the new CEO must now balance this return to tradition with the high profitability demands of Microsoft’s executive leadership.
