Xbox CEO Asha Sharma has announced the formation of Xbox Labs, a new division tasked with exploring emerging ideas in gaming, in response to a recent surge in AI-powered game modding and unofficial browser-based ports of classic titles.
In a post on Xbox Wire, Sharma referenced the growing trend of modders using the Claude Opus 5.5 AI tool to decompile games and blend assets from different titles, creating hybrid experiences. Examples cited include Super Mario 64 mixed with Elden Ring, and Minecraft inside The Elder Scrolls 5: Skyrim. She also noted that some games, such as Halo: Combat Evolved, have received unofficial versions that run in web browsers.
Sharma’s vision for emerging tech
Sharma, who became Xbox CEO earlier this year after previously serving as president of Microsoft’s CoreAI product, was careful not to use the words ‘generative’ or ‘AI’ in her announcement. In her introductory post, she had said her vision would not ‘chase short-term efficiency or flood our ecosystem with soulless AI slop’.
In the Xbox Wire post, Sharma wrote: ‘In recent weeks, we’ve seen games rapidly decompiled and rebuilt to run on hardware they were never originally designed to support. Windows PC builds have been translated to run on Apple Silicon or ported to run inside a browser through WebAssembly and WebGPU, the latter now approaching 90% global browser support. Perhaps more surprisingly, we’ve seen many of the biggest games in the world have been remixed into the source code of another.’
She added: ‘These experiments challenge long-held assumptions about our industry: the tether between software and hardware, the boundary between creation and play, and how people discover and experience games. While it is hard to predict the future of gaming, it is easy to see the possibilities in making great games easier to access, giving old games new life and allowing more players to become creators and co-creators.’
What Xbox Labs will do
Sharma described these developments as ‘unmistakeably good outcomes for players’ because they ‘challenge our existing business models’. She outlined that Xbox Labs has been set up by Xbox’s chief technology officer Scott Van Vliet, who previously worked on Azure OpenAI within Microsoft.
‘To explore these possibilities, I’ve asked Scott to stand-up Xbox Labs, a small group of game makers, engineers and scientists whose job is to turn emerging ideas into things our players and developers can experience,’ Sharma added. ‘We’ll build in the open, learn from what people do, and measure success by whether more people are playing and creating.’
She also noted: ‘Coding became the first major workload for agents because they can write, run, and test software. Games share many of those same properties, and people spend more than 72 billion hours a year playing Xbox games, roughly five times the estimated time spent writing code worldwide.’
Commitment to the 4Cs
Sharma concluded the post by stating that Xbox’s ‘priorities aren’t changing’ and that the company remains ‘committed to the 4Cs’ of core, content, creation, and connection. ‘We remain committed to the 4Cs, to making great games, to our hardware and to being responsible stewards of IP and the communities built around it,’ she said. ‘Labs gives us a way to explore new technology without abandoning the work already underway.’
The exact scope of Xbox Labs remains unclear, but it may go beyond a research and development team, potentially releasing ports of old Xbox games or creating new experiences using technologies like AI. It is likely to be seen as an extension of Xbox’s past work with backwards compatibility, though without tangible products yet, enthusiasm may be tempered.
