Feb 20 (Reuters) - Microsoft ( MSFT ) said on Friday gaming head Phil Spencer is retiring after 38 years at the software maker, in a major leadership shake-up.

The company named insider Asha Sharma as the ​executive vice president and CEO of the ‌gaming division. In her previous role, Sharma led product development for AI models and services at ⁠Microsoft.

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 ( MSFT ) reported that its gaming ‌revenue fell around 9.5% in the fourth quarter, and it recorded undisclosed impairment charges in the division.

Microsoft ( MSFT ) 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.

Spencer ⁠said he would remain in an advisory role through the summer to ensure a smooth handover.

"Last year, Phil Spencer made the decision to retire from the company, and since then we've been talking about succession planning," ⁠Nadella ‌said.

The company also said Sarah Bond, president and chief ‌operating officer at Xbox, is leaving the company "to begin a new chapter."

Matt Booty ⁠has taken over the role of executive vice president and chief content officer at the gaming division, the company said.

Booty was previously president of game content and studios at Microsoft ( MSFT ), according to his LinkedIn page.

Microsoft ( MSFT ) said Booty would report to Sharma, who previously worked at Meta and online grocery delivery firm Instacart.

"The timing ​signals Microsoft ( MSFT ) is moving Xbox from a reinvention phase into an execution phase ... The priority now is operational cadence and a predictable release pipeline," ​said PP Foresight analyst Paolo ‌Pescatore.