Microsoft forms Xbox Labs to explore AI-powered game modding and porting

Microsoft has formed Xbox Labs, a new team tasked with experimenting with decompiling and recompiling games using AI tools. The group will focus on turning emerging modding ideas into experiences for players and developers, Xbox CEO Asha Sharma said in a memo. Xbox Labs will operate in the open, learn from community efforts, and measure success by whether more people are playing and creating.

The initiative responds to a surge in game mods that port titles to new hardware or merge games into new experiences. Recent examples include Windows PC builds running on Apple Silicon and games ported to browsers via WebAssembly and WebGPU, which the article notes has reached 90% global browser support. Modders have also merged code from different games, such as adding skateboarding to Call of Duty and running Halo in a web browser.

Sharma highlighted the broader implications of these changes, stating that they challenge assumptions about the relationship between software and hardware, the boundary between creation and play, and how people discover and experience games. She described the outcomes as "unmistakably good for players," even when they disrupt existing business models.

The memo also positions Xbox Labs within a larger trend where AI agents are increasingly used for coding tasks, noting that games share many of the same properties. Sharma emphasized the scale of Xbox gaming, with more than 72 billion hours played annually, roughly five times the estimated time spent writing code worldwide.

Microsoft did not comment on how it will address unauthorized use of its intellectual property through decompilation and recompilation. The company’s response to such cases remains an open question as Xbox Labs begins its work.