Xbox co-founder says Microsoft CEO Satya Nadella has "a hammer called gen AI" and "there's a nail with an Xbox logo on it"

For Seamus Blackley, who oversaw the creation of the Xbox console and brand in the late '90s and early '00s, the Xbox leadership shakeup has put the writing on the wall. Microsoft CEO Satya Nadella is all-in on generative AI, and in Blackley's estimation, that's why he's put an AI executive in charge of the gaming business.

Microsoft has made "an unprecedented monetary and strategic bet," Blackley told GamesBeat. "This is a company that's trying to recontextualize the way we think about technology in its entirety. They've decided that the lever point that's going to do that is generative AI models. They're looking to fit everything into a generative AI model."

There's an analogy Blackley kept coming back to over the course of the interview: "It's like the thing people say about having a hammer and everything is a nail. That's incredibly true of Microsoft right now. Everything is a gen AI problem. Games, of course, are a gen AI problem. This is why I say this makes perfect sense. If you're Satya, you have a hammer called gen AI and every single problem is a nail."

That's why Nadella has chosen to Asha Sharma, who previously headed Microsoft's CoreAI product, in charge of Xbox instead of "a games person," Blackley said. "In the world of Satya, everything is a gen AI problem, so you put a gen AI person in charge of games with a training model, with boot camps for her to train her like you train an AI model, to bring gen AI into a position to revolutionize games."

Sharma has no background in games, but she's not alone in that regard. Sega, Xbox, and EA veteran Peter Moore came into games from Reebok. EA boss Andrew Wilson came out of the web design and venture capital world of the dot-com boom. Even beloved former Nintendo of America president Reggie Fils-Aimé was a marketing executive for Procter & Gamble and Pizza Hut before he started kicking ass and taking names.

"The problem that we're discussing here, really, and the thing that's important to address, is that they were coming into games because they wanted to be in games," Blackley said. "Asha is coming into games because her boss believes that games are going to be driven by AI. It's a very different approach."

Blackley said that, at the time of the original Xbox's development, "We killed ourselves to maintain a very pure gaming message. 'This is purely for gamers. This is what it's about. We will not allow Microsoft to transform this into a Microsoft agenda device.' That was important because people didn't believe that Microsoft could make something cool. They didn't believe that Microsoft could make something fun. They just didn't believe it."

Xbox is already struggling to present a cohesive identity for the brand in the modern era, and Blackley doesn't seem to believe that an executive with no gaming experience – and one who comes from a background in Microsoft's biggest agenda – will have much luck turning that image problem around. In fact, he thinks she might just be the one "who slides Xbox gently into the night."

"But at the same time, I understand exactly why it is," Blackley concluded. "I know that, again, Satya is holding a hammer and everything is a nail. There's a nail with an Xbox logo on it. He's applying the AI person to it. He has to show shareholders and the press and the world that he is all in on this investment.

"He has to show them that he believes generative AI is going to fix games and make it profitable. He has to make this move. It doesn't matter what you think about it. I don't think he had any choice."

New Xbox CEO, a former Meta and Instacart exec brought in from Microsoft's AI division, says "we will not chase short-term efficiency or flood our ecosystem with soulless AI slop."

TOPICS