Xbox Co-founder on Microsoft's Shift Toward AI and the New Chapter for the Gaming Division

Xbox Co-founder on Microsoft's Shift Toward AI and the New Chapter of the Gaming Division

Xbox co-founder Seamus Blackley gave an extensive interview to GamesBeat, where he shared his views on Microsoft's current strategy, the new head of Xbox, discussed the challenges of creating video games, and the passion needed to succeed in the industry.

AI — The New King

According to Blackley, Microsoft is deliberately reshaping its business around artificial intelligence. He believes that Satya Nadella has made too big of a bet on the future with generative models — investing money, strategic resources, and the company's reputation into it. In this worldview, Xbox does not look like a priority.

Blackley thinks that the gaming segment is gradually being folded down, even if this is not publicly acknowledged. He perceives the appointment of Asha Sharma as a signal: her role is to carefully integrate the division into the new AI reality, rather than develop it as an independent creative business. He even compares the situation to handing a film studio to someone who does not like movies, or a music label to someone who has never been to concerts. Such a decision only makes sense if the leadership views the industry abstractly, as a set of processes rather than a cultural environment.

The task for all these people is to carefully transition these business units into the new AI world. That is exactly what we are seeing now. Whether you agree with this or not, believe in AI's potential, or think AI will be successful — that's a separate question. But this is what is happening. And there's nothing surprising about it. It would have been really strange if someone genuinely passionate about games and the creator-driven industry model was placed in a key position, because that would directly contradict everything else Microsoft is doing. Today, Microsoft is a company striving to provide customers with tools, letting AI manage processes. This approach contradicts the proprietary model of any art, especially games. Microsoft does not have the problem that Apple or Netflix have, where they need to manage a content model built around creators. Games are the only area where Microsoft even has a content business. Seamus Blackley

During the conversation, the GamesBeat journalist admitted that he found it hard to understand how to interpret Asha Sharma's statement that Xbox "will not do AI slop" and will remain focused on creating great games. He doubts whether these words should be taken literally or if there is a different meaning behind them.

Seamus Blackley responded that, firstly, one wants to believe such statements. Secondly, such phrases are standard rhetoric when someone from another field enters the gaming industry. According to him, almost every executive hired "from outside" states in their first press release their love of games and their desire to make quality products. He recalls that even John Riccitiello, when moving from the sporting goods industry to EA, said something similar. It's simply an expected formula in public communications.

The gaming industry is primarily a content business, not purely a technology business. People coming from other sectors often think that games are about computation, rendering, or just software. But according to Blackley, this is a misunderstanding. Games are creativity and content work, and if a leader is not prepared for this reality, they "hit a wall." Some executives from other fields have indeed succeeded in the industry, but others failed precisely because they underestimated the creative component.

Blackley mocks Sharma's statement about wanting to "figure out what makes games work." It reminded him of the meme "How do you do, fellow kids?"—when adult Steve Buscemi tries to appear "one of the kids." Seamus jokes: "Now I’ll find out what’s interesting about games," hinting that the industry is much more complex and deeper than it may seem from the outside.

At the same time, Blackley does allow that such stories can end successfully: there have been cases in the past when leaders from outside the industry achieved results. Maybe, he says, this time it will work out as well.

Microsoft’s "Hammer and Nails"

Later, the journalist asked Blackley if he believes in the continuation of the Xbox console strategy and whether a scenario like SEGA’s path is possible—gradually exiting the hardware market and changing the business model.

Blackley thinks that the comparison to SEGA is inappropriate. In his opinion, the rules are completely different now. He emphasizes the scale of Microsoft's bet on artificial intelligence: this, according to him, is an unprecedented financial and strategic decision in business history. This is not about a "graceful exit" from the market as SEGA did, but about a complete rethinking of the technological paradigm. The company has decided that generative AI will be the fulcrum for this and is now striving to integrate everything into this model.

Dreamcast — SEGA’s last full console.

It’s like the saying: if all you have is a hammer, everything looks like a nail. And this now perfectly describes Microsoft. Everything is a task for generative AI. Games, of course, are also becoming a task for generative AI. That’s why I say there is logic to this. If you are Satya, you have a hammer called AI, and every problem is a nail. Then who do you put to lead the gaming division? Someone from the gaming industry? No. Because in Satya’s world, everything is a task for generative AI, which means gaming must be headed by an AI specialist, with a training program, boot camps, to train her just like you train an AI model, and bring generative AI to a position where it can