Phil Spencer reportedly planned to launch new Xbox console, but slow sales forced retirement

As part of massive changes at Xbox, Microsoft Gaming CEO Phil Spencer is stepping down immediately. In a public memo, he revealed that he began contemplating retirement in Fall 2025. However, according to insider TheGhostOfHope, the move was originally to happen after the new Xbox console release date. Declining hardware and game sales may have expedited these plans.

The retirement news didn't surprise one insider

TheGhostOfHope is primarily known for his accurate Call of Duty leaks. In July 2025, he claimed that Phil Spencer would leave Microsoft following the debut of a new system, anticipated as early as 2027. Xbox Communications lead Kari Perez denied the rumor, saying that “Phil is not retiring anytime soon.”

The report now seems more legitimate, but the timetable for the CEO’s exit has apparently changed. In a social media update, the leaker believes the “past year of underperformance” for Microsoft Gaming may have been a factor.

Before Spencer’s retirement rumor surfaced, he was under fire for studio closures and the loss of Microsoft jobs. Since then, Xbox console sales have continued to slow, as the company prioritizes cross-platform publishing. Perhaps more concerning, sales from content and services are also declining. The struggles led to a 9% fall in gaming revenue in its latest quarterly financial report.

Phil Spencer contended with fading sales

TheGhostOfHope points out that Call of Duty, Microsoft’s “cash cow,” has been a recent disappointment. Black Ops 7 launched with historically low Steam player counts, well below shooters like Battlefield 6 and Apex Legends. These numbers prompted Activision to adjust the franchise's yearly release schedule.

Critics also bemoan the shift away from exclusive games, which has made hardware less appealing. The next system co-developed with AMD will likely rely on Windows and PC-compatible titles. Regardless, Spencer reassured gamers that the new Xbox console would be a “first-party” offering.

In his tenure, Spencer oversaw the arrival of the Xbox One S and Xbox Series X|S. That streak is now over, with Asha Sharma assuming his position. The ex-President of Core AI Product promises a “renewed commitment to Xbox starting with console.” Not surprisingly, fans remain skeptical of the company’s strategy.