Microsoft's AI Pursuit Meant a Change of Xbox Leadership Was Inevitable | The Take
Anyone else thing Spencer jumped before he was pushed?
Welcome to The Take, our editorial issues of the AI and Games Newsletter where we dig into the bigger issues impacting artificial intelligence in the video games industry. Issues of The Take are exclusive to premium subscribers of AI and Games.
Hello one and all and welcome to this week’s edition of AI and Games. Today this issue lands in your inbox as I am attending the Gamescom Dev Leadership Summit in Lisbon: a 3-day retreat for leading professionals in games to come together and discuss the issues impacting our sector. I was invited out here to present a keynote on AI which will take place later this evening, wish me luck!
The leadership summit is designed largely to operate behind closed doors, and we agree to an NDA upon arrival. This means that my ability to report back on this for readers will be quite limited. That said, I will strive to put together a summary next week that covers some of the talking points raised throughout my time here, and reflect on my own experiences with respect to my non-disclosure.
In the meantime, I was around 30-40% through writing another topic for this edition of The Take, only for the news about Microsoft’s leadership swap to blaze across the internet last Friday. Usually at this point I’d just soldier on and we’d make that but one of the headlines in our news round-up, but actually this felt worth changing my existing plans given it touches on a point I raised just last month.
Onwards!
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Announcements
Just one this week, short’n’sweet.
New Case Study on GameBot’s COTA Demo
Not content with launching a case study on Snowcap at the start of the month, we just published a new piece both on the website and YouTube about COTA: a technical demo created by GameBot designed to showcase how they have built an LLM architecture capable of playing entire rounds of a tactical first-person shooter.
The COTA demo is available now for anyone wanting to try it out. I was invited a few weeks in advance to try it out and give my impressions. Plus we had a stack of questions for GameBot about how it all works, and had the pleasure of getting insights from the project lead Mu Yang. You can read it on the site now, or check out the accompanying YouTube video which has a lot of footage of the demo in action.
The Take: Microsoft Gaming’s Change of Leadership
Last month I wrote my 2026 predictions issue: my overview of every major talking point I expect to be coming our way in the next 12 months. After publishing, I spoke with some members of our Discord community as well as folk out in the industry about what I wrote - it’s true I do actually meet folks who read this newsletter in the real world! While some readers argued I’d went for low-hanging fruit, the one that raised a few eyebrows was #9: The Death of Xbox as a Platform.
To quote the end of that segment:
By the end of 2026 there will still be Xbox consoles on the shelves - assuming stores keep selling them. But unless efforts are made to improve the public image of Xbox and the value it is bringing to players as a platform, the console space they operate in will be largely a net loss, and the brand would be best served as a games publisher on PC, PlayStation and Nintendo.
This argument was driven largely by both the repeated failure to give a reason and justification for the Xbox as a console, but also with how the gaming vertical sits within Microsoft’s broader business. To my mind, it’s not a sustainable strategy in the long run for them to maintain Xbox as a portfolio of hardware to sell subscriptions given the parent company’s broader goals and AI-focussed aspirations.
Now one thought that had crossed my mind - that I wasn’t confident enough to predict - was that Phil Spencer could step down and allow his next-in-line, Sarah Bond, to take the mantle. Spencer would then assume a different role within the Xbox space at Microsoft. However what transpired last week, was even worse than what I had anticipated, and it only further accelerates the trends I’ve observed that my prediction was based on.
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