Xbox Launches 'Xbox Labs' to Experiment With AI Game Remixes, Ports, and Mods

Xbox is getting its own laboratory. CEO Asha Sharma has announced Xbox Labs, a new experimental division tasked with exploring the technologies that are changing how games are made, ported, and played, from AI-powered game remixes and mods to ports that carry blockbuster games onto platforms they were never built for.

Sharma unveiled the team on October 13 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 players and developers can experience. The unit will be led by Scott Van Vliet, who became Xbox's chief technology officer in May after overseeing Azure OpenAI and AI infrastructure at Microsoft.

Curiously, Sharma's memo never uses the word AI, even though the whole effort is built around it. The note frames the mission in terms of agents: coding became the first major workload for agents because they can write, run, and test software, and games share many of those same properties.

Sharma pointed to what creators are already doing on their own: games decompiled and rebuilt to run on hardware they were never designed for, Windows PC titles translated to run on Apple Silicon or inside a web browser, and some of the biggest games in the world remixed into the source code of others.

She called these unmistakably good outcomes for players, even when, and sometimes because, they challenge existing business models.

The move is a notable shift in tone for the new CEO. In her first memo in February, Sharma promised games would be crafted by humans and pledged not to flood the ecosystem with soulless AI slop. In May, she pulled Gaming Copilot from mobile and cancelled its planned console launch, retiring features that did not fit where Xbox is headed.

Labs does not break that pledge yet, since it has not shipped anything, but a team built around agents and remixing games is a different posture from the one she set out eight months ago.

A spokesperson told GamesIndustry.biz that the team has no explicit mandate to use AI, and that no new staff were hired: Xbox Labs folds existing research work, including Apple silicon ports, browser-based distribution, and modder tools, under one roof.

The announcement arrives in the middle of Xbox's largest restructuring ever. In July, Sharma unveiled a plan to cut roughly 3,200 jobs by the end of fiscal 2027, about a fifth of the workforce, and the division has since cut ties with several studios while moving Halo development to Activision.

Sharma told staff the restructuring was about 75 percent complete and insisted priorities are not changing.

There is nothing to play or download yet. The Xbox Labs website currently holds an email signup box under the tagline let us play with what is next, with no date given for the team's first project.

Sharma said the team will build in the open, learn from what people do with its work, and measure success by whether more people are playing and creating, sharing the tools it builds with developers across the industry.