This Sunday marks 25 years of Xbox. To commemorate the occasion, Xbox CEO Asha Sharma wrote a lengthy post on X cataloging Microsoft’s long history with gaming that goes back long before the original Xbox was released on Nov. 15, 2001. However, while the post mostly reads like a typical anniversary blog from a gaming executive, the last chunk implies the company may be going in a new direction with the most controversial technology of the moment: generative AI.
“While modern games demonstrate the heights of human craft in ways unimaginable just decades ago, the cost, resources, and risk required to create them have grown just as dramatically,” Sharma wrote. “As a result, too many ideas never become games, and too many games fall short of what their creators imagined. For decades, this has been the unavoidable tradeoff of ambition. We must change this.” Sharma recently described Microsoft’s gaming division as “not healthy,” and declared Xbox was in the middle of a “reset” that has already led to more than a thousand job cuts and the sale of several beloved studios, including Double Fine.
Sharma’s next paragraph provides some insight into how the company may try to turn things around. “Throughout human history, the scale of what we could create was determined by the people, capital, and resources we could command,” Sharma continued. “That relationship is beginning to break. A single person will soon be able to wield capabilities that once required entire nations. A small team will be able to build worlds that today demand hundreds of developers and hundreds of millions of dollars. And our largest studios will be able to pursue ambitions as far beyond today’s games as Microsoft Flight Simulator 2024 is from its first entry in 1982.”
While Sharma was careful never to use the term “AI,” the idea of a “small team” being able to “build worlds that today demand hundreds of developers and hundreds of millions of dollars” only seems feasible in the context of this technology. Modern AAA video games tend to require more developers, not fewer, and as a result, development costs have been rising across the industry.
Sharma’s background in AI
Since Sharma was appointed the new CEO of Xbox, many have speculated that Microsoft’s gaming division would eventually lean into AI. Before landing her current role, Sharma served as Microsoft’s corporate video president and head of product for its AI platform and then led the company’s CoreAI product organization.
Amid ongoing backlash against generative AI over its potential negative impact on labor, artistic expression, and the environment, Sharma has downplayed her previous involvement with this technology. In a blog post from February, she said, “As monetization and AI evolve and influence this future, we will not chase short-term efficiency or flood our ecosystem with soulless AI slop. Games are and always will be art, crafted by humans, and created with the most innovative technology provided by us.”
However, on Oct. 13, she announced Xbox Labs, an experimental division inspired by the recent crush of AI-driven game decompilations, ports, and mods. Despite this group unambiguously dealing in AI-generated code, Sharma managed to avoid using the word AI even once in the post revealing this team.
Sharma’s latest blog is quite similar, describing ongoing changes in the video game industry driven by generative AI without directly naming the technology. While many players rightfully dislike generative AI being used to create games, using AI to write or assist with code has quietly taken over the software industry. Stack Overflow’s 2025 year-in-review survey found that 84% of polled software developers were using AI tools in some capacity. While there is still hope that this situation could be reversed through legislation or other means, it seems likely that most large game companies will continue to lean into generative AI until something significant changes.
