Microsoft scraps Copilot on Xbox consoles in new business reorientation

Microsoft is officially retiring Gaming Copilot on Xbox consoles and shifting gears to focus on optimization, efficiency, and growth.

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Xbox is changing. The division today announced a big corporate shake-up that saw two Xbox veterans leaving the group, and five new hires joining the team, including multiple people from Microsoft's OpenAI teams. Also, a former Instacart exec now leads Xbox's subscription and cloud business. This realignment also sees Microsoft scrapping plans that no longer fit its vision, like Copilot AI integration on Xbox consoles.

Xbox CEO Asha Sharma today confirmed that the program is being shut down: "As part of this shift, you'll see us begin to retire features that don't align with where we're headed. We will begin winding down Copilot on mobile and will stop development of Copilot on console."

Sharma continues, saying that these cuts will help Xbox focus on the things that really matter to the division:

"Xbox needs to move faster, deepen our connection with the community, and address friction for both players and developers. Today, we promoted leaders who helped build Xbox, while also bringing in new voices to help push us forward. This balance is important as we get the business back on track."

Copilot's AI-assisted gaming features weren't all that exciting to gamers, and Microsoft apparently will keep its Copilot gaming AI features available on Windows 11, where they are built in on an OS level.

With Xbox's revenues falling -$380 million year over year, and the division delivering its weakest hardware sales of the entire 9th console generation, it's fair to say that Xbox currently has more important things to focus on than nascent AI technology that many of its users may not use anyway.

We saw proof of concept of Copilot's AI gaming use case a year ago with a Minecraft demo, wherein a user is led by a voiced AI Copilot on what tasks to do in the game.

Sharma, aka the "Xboss," has hinted at the health of the Xbox business, saying that margin expansion has been successful, but revenue and users aren't growing. To help kickstart that, Call of Duty has been moved out of Game Pass, an effort that will hopefully drive up Game Pass subscribers (or reduce churn) while also preserving the front-line value of the shooter franchise by moving it back behind a $70 paywall.