What just happened? As Xbox sales continue to decline and mystery shrouds the brand's next steps, Microsoft is replacing its gaming division leadership. Although the new Xbox CEO has pledged to recommit to console users, her background as the company's AI executive might alarm users who are concerned with Microsoft's enthusiastic adoption of AI.
Microsoft CEO Satya Nadella recently announced that the company's CoreAI Product president, Asha Sharma, has become the CEO of Xbox, replacing retiring Xbox boss Phil Spencer.
Former Xbox president Sarah Bond was long thought to be the 38-year veteran's replacement as head. However, Bond has recently resigned from the company. Sharma, a Home Depot board member who was previously Instacart's COO and Meta's Vice President, has promised to continue fostering game development and refocus on Xbox consoles.
Meanwhile, former president of Microsoft's Game Content and Studios, Matt Booty, has been promoted to Chief Content Officer. Before joining Microsoft in 2010, Booty had worked at Midway since the early 1990s and led the company from 2008.
The new Xbox CEO issued a statement attempting to dampen concerns regarding her prior role as the company's AI executive, promising not to flood the ecosystem with AI slop. Although Sharma pledged to recommit to consoles and console owners, she also reiterated Microsoft's aim to seamlessly connect consoles, PCs, mobile devices, and cloud computing.
Analysts expect the next Xbox console to be a PC or hybrid device that supports games from prior Xbox consoles and all Windows apps. Microsoft wants to give Windows 11 a console-style makeover. However, the company has mentioned plans to turn Windows into an "agentic OS," centered around Copilot. If it follows through, the Windows experience could become radically different from what it is now.
– Pirat_Nation (@Pirat_Nation) February 20, 2026
Xbox's dramatic reorientation follows years of declining hardware sales. Under Spencer, but also at least partially influenced by Nadella, Xbox has pivoted away from exclusive games and toward its Game Pass subscription service. Microsoft also made a series of massive corporate acquisitions, culminating in the historic $69 billion purchase of Call of Duty publisher Activision Blizzard. Concurrent player numbers for the top-selling first-person shooter franchise have declined steadily since 2023's Modern Warfare II, contributing to Xbox's troubles.
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Phil Spencer joined Microsoft as an intern in 1988 and has been part of the Xbox team since the original console launched in 2001. He became head of Xbox in 2014, soon after the launch of the Xbox One, which initially faced criticism for its focus on motion controls and TV entertainment over traditional console gaming.
Meanwhile, Sarah Bond's departure from Xbox feels sudden. The former Xbox president was widely seen as Spencer's heir apparent. Furthermore, she did not release a statement alongside Nadella, Sharma, Spencer, and Booty, and Nadella did not mention her in his announcement.
Microsoft replaces Xbox heads Phil Spencer and Sarah Bond with AI exec
