•Xbox has unveiled Xbox Labs, a new initiative aimed at bringing more people into gaming—particularly through web browsers—even though the announcement makes no mention of artificial intelligence. The move comes as games built with generative AI and “vibe-coded” titles playable in browsers have surged in popularity.
Xbox CEO Asha Sharma wrote that recent developments are reshaping assumptions about gaming.
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.
Asha Sharma, Xbox CEO
Sharma noted that some of the biggest games in the world have also been “remixed into the source code of another,” challenging what she called long-held assumptions about the industry: the relationship between software and hardware, the boundary between creation and play, and how people discover and experience games.
Xbox CTO Scott Van Vliet will lead a small team tasked with turning emerging ideas into experiences for consumers and developers. Alongside Xbox Labs, Microsoft announced the formation of XP, a new subdivision focused on expanding Xbox’s presence through film, television, and live events.
The heavy reliance on AI to create games remains controversial in Western markets, though Asian studios have more fully embraced it. Dragon Quest creator Yuji Horii is among the technology’s prominent supporters, with other developers incorporating AI into their workflows to address rising development times and costs.
Dragon Quest creator Yuji Horii has been a vocal advocate of using AI in game creation. Meanwhile, online projects continue to proliferate—ranging from vibe-coded remasters of older titles like The Simpsons: Hit and Run to mash-ups blending franchises such as Minecraft and Elden Ring.
Microsoft holds a significant stake in the broader AI competition, with major investments in the technology contributing to a surge in profits.
The formation of XP marks Xbox’s latest effort to broaden its reach beyond gaming. Elsewhere in the industry, Epic Hry—the maker of Unreal Engine and Fortnite—is reportedly pivoting toward an AI-first game-development model and has delayed an unannounced shooter featuring Marvel and Star Wars characters. Epic Hry is also making a huge pivot.
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