Microsoft might say its top priority right now is security, but it’s been clear for months that AI is just as important. The odd division out has been Xbox, which hasn’t discussed its use of AI much in public. But that changed last week when Microsoft ripped the band-aid off and waded, somewhat clumsily, into the debate over AI in gaming.
Last Wednesday, Microsoft revealed Muse, its new AI model that can generate gameplay. It was trained on Ninja Theory’s Xbox game Bleeding Edge, and it can understand a 3D world and physics and then respond to players’ interactions. While Muse is a Microsoft Research project at heart, Microsoft presented it in a way that linked it directly to Xbox and the future of the company’s gaming efforts. That has divided opinion between those who argue that Microsoft will use this model to build games and lay off developers, and others who think this is still very early and simply another tool in a game developer’s kit.
I’ve been speaking to game developers over the past week to get a better understanding of the response to Muse. Of the handful I’ve spoken to, no one is willing to speak on the record for reasons like career concerns and the potential impact speaking out might have on game deals with Xbox. Most echo what David Goldfarb, developer and founder of The Outsiders, posted on X last week, “Fuck this shit.”
Goldfarb expanded on that brief response in an interview with Wired. “When we rely on this stuff we are implicitly empowering a class of people who own these tools and don’t give a fuck about how they reshape our lives,” he said.
That’s a concern I’ve heard from multiple game developers: if they accept these AI tools then what happens next? There’s a growing fear in the game industry right now that AI will replace human creators, and it’s not a baseless fear, either. Almost half (49 percent) of 3,000 respondents to a Game Developers Conference (GDC) 2024 survey said that generative AI tools are currently being used in their workplace, with 31 percent saying they personally use them. In an industry that’s already struggling with costs and layoffs, the anxiety over AI replacing jobs is high.
Some developers are hoping that models like Muse will be limited to the early stages of game development, where you could use an AI model to create some rough gameplay instead of sketching out ideas and concepts. Given how nascent Muse is, that seems like a reasonable assumption right now, but as models get more capable over time, where do the lines blur?
Microsoft CEO Satya Nadella described Muse as a “massive moment of wow” in a recent podcast. “We're going to have a catalog of games soon that we will start using these models, or we're going to train these models to generate, and then start playing them,” he said.
Microsoft is getting ready to release at least one AI-generated game on Copilot Labs, the company’s test bed for AI that requires a monthly $20 subscription to Copilot Pro. Sources familiar with Microsoft’s AI research work tell me the company has also been experimenting with several mini games that are best described as AI-infused. The games, developed by Microsoft Research, use generative models and both human writers and reviewers to create stories and illustrations. One of the mini games, Rushes, lets players select storylines and make choices that influence the AI-driven narrative.
I’m not expecting Microsoft to release these mini games, as they're designed as research projects on how AI models and humans interact in game design, but the company could always highlight them in the future. Microsoft chose to demonstrate its Muse model running in real time during an employee-only town hall earlier this week, instead of these mini games.
The work between Microsoft Research and Xbox on mini games and models like Muse are just the beginning of Microsoft’s AI in gaming efforts. At GDC next month, Microsoft is planning to highlight more ways it's using AI in gaming. In one session, Fatima Kardar, corporate vice president of gaming AI at Microsoft, will discuss “how Xbox is using AI to unlock new opportunities across the Xbox ecosystem for both players and game creators.” Another session will demonstrate how game developers and researchers at Microsoft are experimenting with new AI tools for gaming.
While many of Microsoft’s AI sessions at GDC will be future-looking, there are a couple from Blizzard that will detail how World of Warcraft developers use AI models to automate 3D armor fitting or how developers parse through player feedback using large language models. These show off the potential for AI tools to assist developers rather than replace them, so they’re likely to be far less controversial than an AI model that generates gameplay.
Microsoft says it’s now leaving it up to its own game studios to decide on how AI is used across their games. “We don’t intend to use this technology for the creation of content,” said Ninja Theory studio head Dom Matthews, in a video accompanying Microsoft’s Muse announcement last week. Just days later though, Microsoft-owned Activision was forced to confirm that Call of Duty uses AI-generated content. The confirmation came months after fans noticed a zombie Santa with six fingers in a loading screen in Black Ops 6 over the holidays, alongside weapon decals and player cards that seemed to be AI generated.
How Microsoft’s other Xbox game studios react to its push for AI in gaming is going to be something to keep an eye on throughout 2025, especially when developers outside of Xbox have loudly criticized AI use in game development, with one indie developer creating a “No Gen AI” seal that developers can use on their game’s store page. There might be a growing pushback against AI in gaming from developers and players, but I don’t think it will be long until other Xbox game studios make the decision to use AI tools or AI-generated content. By unveiling Muse last week, Microsoft has made clear it wants its studios to be at the very forefront of AI in gaming, regardless of the pushback.
