Xbox Labs' Major AI Announcement Drops the Term 'AI'

New Team Tasked with Exploring AI-Coded Games

A new team has taken on the task of exploring games coded with artificial intelligence

This month there is a flood of genAI gaming projects. Look at a few projects and your feed will soon be flooded with coded ports, mixes, mods and Homebrew features. A lot of it is fake. Much of it has crumbled. But it's not all rubbish. Some of it actually works. It's not clear where it's all going, but Microsoft is reacting faster than usual and planting its flag in the emerging scene of genAI gaming stuff. It announced a new initiative called Xbox Labs, and it did so without directly mentioning AI, or even AI once.

In a new blog post on October 13, Xbox CEO Asha Sharma wrote: “In recent weeks, we've seen games quickly decompile and remaster to run on hardware they weren't originally designed to support. "Amazingly, we've seen many of the biggest games in the world being converted into another game's source code."

You'd think it all just magically appeared in the ether. Things have been "translated" and "remixed", but by whom, using what? Note: People using artificial intelligence models like Claude Opus 5.5.

In light of this rapidly evolving new trend, Xbox CTO Sharma Stascott Van Vliet is building "a small group of game developers, engineers and scientists tasked with turning emerging ideas into something our players and developers can experience." The group is called Xbox Labs, they're built "in the open," and success is measured by whether people actually care about what the group posts.

By the end of the post, Sharma adds, "coding has become the first major workload for agents because they can write, run, and test software." Again, no direct reference to AI agents or the broader AI arms race that currently makes the Xbox console the most important "4C" the team "remains committed to" and is very expensive to make, sell, and buy.

It will be interesting to see what comes out of Xbox Labs, and whether Xbox can figure out how to talk about it without making accusations of a flood of games with a more genAI slant. The bet might be that until Xbox Labs can come up with something cool that players will actually like, AI will no longer be a dirty word in the gaming world. GenAI game tutorials were one of the big features Xbox was supposed to launch this year, and it was one of the first things Sharma canceled after taking over.

Online reaction to the first wave of Xbox AI features was widespread disdain and disdain. We'll see if Xbox Labs can come up with something that provokes a different reaction.

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