Jason Ronald, Microsoft’s Vice President for the Xbox Gaming Devices and Ecosystem division, said the next generation of Xbox hardware will have AI-powered features that will be “transformative” to gameplay.
As spotted by The Verge, Ronald shared the news on an episode of the company’s official Xbox podcast earlier this week. While talking about preparations for the next generation of Xbox Cloud Gaming, as well as the company’s next-gen Xbox console, Ronald said the company is working with AMD to design dedicated silicon and hardware and investing in technologies like neural rendering to bring “a new level of quality” to games.
He then hinted that AI-powered features are also part of the plan for the next Xbox. “We’re also investing in dedicated silicon to enable the next generation of AI capabilities, that will be transformative in how you actually experience your gameplay,” Ronald said.
While there isn’t much information about the new Xbox console, Microsoft will “start experimenting” with some of these AI-powered features on the upcoming ROG Xbox Ally X device. According to Ronald, this is thanks to the device having a dedicated NPU chip similar to Microsoft’s Copilot Plus PCs, which are the company’s line of AI-powered PCs and laptops.
Announced back in June, the Xbox Ally devices are set to release on October 16, as confirmed by Microsoft during Gamescom. Speaking to IGN, Microsoft and Asus said the companies still need “more time to figure out the macro-economic impact to pricing,” a statement that comes amid wariness around US tariffs. Just today, Sony announced a price increase for the PlayStation 5 in the US during ongoing “challenging economic environment.”
Microsoft keeps touting AI amid layoffs, concerns over Israel using its tech in Gaza invasion
Microsoft has barreled on ahead with its plan for generative AI technology in games and on Xbox despite developer backlash and controversy over its use. And that’s not the only controversy it’s courted in 2025.
In July, an Xbox spokesperson confirmed to Game Developer that “workforce changes” were being made across Xbox-owned studios, following multiple reports about redundancies across Microsoft. Bloomberg reported that the company made 200 people redundant at King’s offices in Barcelona, Spain, while other European offices such as ZeniMax were also impacted. Meanwhile, The Seattle Times reported that Microsoft was laying off 4 percent of its total workforce, which amounted to around 9,100 employees.
At the same time, Microsoft has been caught in widely-reported ties to the Israeli regime and its military surveillance agency, with one of the latest reports written by The Guardian in early August. In an open letter issued by STJV union members at Arkane Studios in France, which is an Xbox-owned studio, the members joined the Palestinian-led Boycott, Divestment, Sanctions (BDS) movement in calling for parent company Microsoft to end its support for an Israeli regime that a United Nations Special Committee last year said has been waging war on Gaza in a way that is “consistent with the characteristics of genocide.”
“We think that Microsoft has no place being accomplice of a genocide, and as Microsoft employees, we don’t want to be part of this sinister project for Gaza. Moreover, we think it’s our responsibility, as tech workers, to raise the alarm, and to ensure that our technologies are used to make the voices of the oppressed heard, and not facilitate their demise,” reads the open letter. At Gamescom, during an on-record conversation with Grounded 2 game director Chris Parker and Eidos Montreal creative director Justin Vazquez, Game Developer asked the former for their thoughts on making games at Microsoft during a turbulent period of heavy layoffs and widespread condemnation over the company’s widely-reported ties to the Israeli regime and its military surveillance agency.
Two Xbox spokesperson immediately quashed the question by explaining their devs are only here to talk about their games and directed us to reach out via email for comment on other topics.
Later in the day, Microsoft responded to Game Developer’s request for comment by restating plans to undertake a formal review into a report published by The Guardian that asserts Azure technology is currently being used by Israeli Defense Forces (IDF) to surveil civilians in Gaza and the West Bank en masse.
“The Guardian, on that date, reported that multiple individuals have asserted that the IDF is using Azure for the storage of data files of phone calls obtained through broad or mass surveillance of civilians in Gaza and the West Bank. Microsoft’s standard terms of service prohibit this type of usage,” it said in an updated blog post published on August 15. It promised to expand on the company’s earlier review and that it “appreciates” The Guardian’s recent report.Developers have broadly expressed concern over the use of generative AI thanks to its heavy environmental impact and lingering questions over the legal and ethical use of training data. At this time Microsoft has not specified just what these new AI capabilities are, making it difficult to ascertain if these concerns will continue.
