Friday’s news of a major shake-up at Microsoft’s Xbox division caught the gaming world by surprise. Phil Spencer, who has run Xbox for almost 12 years, announced his retirement, effective immediately—just months after Microsoft insisted he was “not retiring anytime soon.”
Asha Sharma, the president of Microsoft’s CoreAI product, was tapped to run the division. Once a powerhouse earner, Xbox has seen its profitability and influence shrink in recent years. (Xbox president Sarah Bond, long seen as Spencer’s heir apparent, was passed over and also left the company.)
Sharma may face an uphill battle.
Microsoft has not reported updated Xbox console sales or Game Pass subscription numbers in years. The available figures haven’t been encouraging. Xbox hardware revenue fell 32% year over year in the recent holiday quarter. Overall gaming revenue dropped 9%, and Xbox content and services, which includes Game Pass, declined 5%.
Sharma has already taken some knocks online for lacking a deep history in video games. Some of that online blowback reflects the sexism that often runs rampant in gaming. (Sharma will be the first woman to run a major console manufacturer.) But criticism of her gaming pedigree also reflects a kind of gatekeeping.
Strauss Zelnick, CEO of Take-Two Interactive Software, has said he was not a gamer when he took charge—and still isn’t. Yet Take-Two has delivered a string of hits under his leadership, most notably the Grand Theft Auto franchise, and its share price has increased fifteenfold since he took the job. “I don’t think anyone wants or needs my specific creative expertise, such as it is,” Zelnick once said. “It’s my job to attract, retain, and provide the resources to the best creative talent in the business.”
Dwindling sales and a divided focus
Time will tell if Sharma follows that same path. But if she does, instead of focusing on big individual launches, she’ll have to persuade gamers to buy both the hardware and a subscription service that increasingly makes that hardware feel optional.
