Yesterday was awful for people who work at Microsoft and the gaming industry in general. Thousands at the company either saw colleagues laid off or were laid off themselves, while outside observers watched as more game developers and projects were put on the chopping block. Microsoft’s $80 billion bet on AI was reportedly part of the rationale for the cuts. So it was a particularly bad time to be excitedly inviting people to an upcoming roundtable on how AI can make game development more efficient.
But that’s exactly what happened according to a July 2 email from ID@Xbox, the team within the tech giant’s gaming division responsible for supporting smaller teams and bringing their vibrant games to the platform. “Hello!” began the confidential invite to partner studiosshared on social media by Necrosoft director Brandon Sheffield. “We are excited to be heading to Gamescom 2025 in Cologne, Germany, again this year! If you will also be attending, we are offering an AI Roundtable where you can provide us your feedback on how you’d like to see us use AI in our tools and processes to make the game development and publishing experience more efficient.”
Image: Bluesky / Kotaku
The likely innocent, possibly well-intentioned reach-out nevertheless struck a tone-deaf note coming just as mass layoffs began rolling out across Xbox, from Candy Crush maker King and Bethesda Europe to Forza Motorsport maker Turn 10 and Blizzard in the U.S. It’s not just that teams are being slashed and projects like Everwild and Perfect Dark were canceled, it’s also how the entire grim affair is haunted by the specter of generative AI.
Microsoft is investing more than all of its gaming acquisitions combined in building the infrastructure for an AI moonshot it thinks will cement its profitability and indispensability for decades to come, the way it did first with Windows and later Azure cloud computing. It’s hard not to see the repeated cuts to Xbox as one way the company is trying to pay for it. What feedback might someone who was just laid off at Halo Studios or Undead Labs give at the ID@Xbox roundtable? “Please give me my job back”? “Don’t replace us with AI”?
There’s also the growing fear that generative AI will drastically upend game development as an art and profession by giving managers new ways to potentially cut costs and remove the most important but unpredictable variable from the equation: people. Studios are already experimenting with AI-generated text, art, and characters, while publishers like EA rush to incorporate the technology anywhere they can in order to hype up shareholders and maintain the illusion of being lean, nimble, and “forward thinking.”
If nothing else, the ID@Xbox email shows the precarious nexus in which Microsoft’s gaming division finds itself, balanced between the dollar signs in executives’ and shareholders’ eyes and an audience of millions of players who are at the forefront of the cultural backlash to AI. They really hate it. That makes attempts to shoehorn it into Xbox—whether through hallucinating gameplay prototypes or efforts to solve backwards compatibility woes—come off as particularly out of touch. One thing AI definitely can’t do is pay developers to make games. Companies like Microsoft can. We’ll see if they decide to keep doing it.
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