Xbox is creating a new team to experiment with technologies that are changing how games are made, ported and played — including some that run counter to how the game industry and its business have traditionally worked.
Microsoft Xbox CEO Asha Sharma announced Xbox Labs on Tuesday in a memo to employees, describing it as “a small group of game makers, engineers and scientists whose job is to turn emerging ideas into things our players and developers can experience.”
The group will be led by Scott Van Vliet, Xbox’s chief technology officer since May. Sharma said the team will build in the open and measure success “by whether more people are playing and creating.”
Sharma pointed to recent examples of games being decompiled and rebuilt to run on hardware they were never designed for, as well as Windows PC games translated to run on Apple Silicon or inside a web browser. She called these “unmistakably good outcomes for players, even when (and sometimes because) they challenge our existing business models.”
The memo never uses the term AI (or SI), but it frames the effort in part around AI agents.
“Coding became the first major workload for agents because they can write, run, and test software,” Sharma wrote. “Games share many of those same properties.” She said people spend more than 72 billion hours a year playing Xbox games, roughly five times the estimated time spent writing code worldwide.
Sharma came to Xbox in February from Microsoft’s CoreAI division. In her first memo as CEO, she said games would be “crafted by humans, and created with the most innovative technology provided by us,” and pledged not to “flood our ecosystem with soulless AI slop.”
In May, she pulled Gaming Copilot from mobile and canceled its console launch, saying Xbox would “retire features that don’t align with where we’re headed.”
Microsoft last month cut 268 roles in Xbox Game Studios and moved work on the next Halo game to Activision. It was the latest round in a reset Sharma announced in July, which called for about 3,200 job cuts by the end of this fiscal year, roughly 20% of the Xbox workforce. The company said at the time that the restructuring was about 75% complete.
Xbox’s priorities aren’t changing, Sharma wrote in her new memo, describing Labs as “a way to explore new technology without abandoning the work already underway.”