Gamers’ Biggest Fears About AI Are Becoming Reality

The gaming community was thrown into a frenzy last week when Seamus Blackley, the original creator of Xbox, remarked in an interview with Gamesbeat that the console is approaching its end.

However, if you delve into the interview or his comments on Bluesky, you’ll see he intended to convey that something essential to Xbox feels off: The console he developed is in “distress.” Blackley suggested that Asha Sharma’s February transition from AI executive to executive vice president and CEO of Microsoft Gaming indicates that the product is in “palliative care.”

Xbox is not shutting down, but many quickly fell for the headlines, given the current ominous atmosphere in the industry. What’s going on?

While gaming saw unprecedented growth during the pandemic, artificial intelligence has been lurking in the background. The rise of AI in the gaming sector is already leading to job losses and devaluing the efforts of developers at studios facing scrutiny from anti-AI gamers. Data centers have drawn away RAM from the industry, causing a global memory shortage that has inflated costs for hardware needed for consoles, delaying releases and making at-home PC building—a once essential experience for novice gamers—a luxury item.

In December, Valve announced it would be discontinuing its Steam Deck LCD 256GB model, released in 2022, and the anticipated 2023 upgrade seems to have vanished. This marks the first time a major console has been discontinued ahead of the launch of a significant upgrade; Valve’s Steam Machine, a box purportedly six times more powerful than the Steam Deck, is expected this year, but its release date and price remain unconfirmed. Meanwhile, prices for Xbox and PS5 have escalated. According to Bloomberg, Sony has neither confirmed nor denied that the successor to the PS5, initially expected in late 2027, has been postponed another year. Nintendo, having narrowly dodged new tariffs affecting the Switch 2 launch in 2025—which they are currently suing the US government over—is not excluding price increases.

Six years ago, during global lockdowns, the gaming industry was flourishing.

Animal Crossing: New Horizons sold 13.4 million units within just six weeks of its March 2020 launch, achieving the highest number of digital sales for a console game in a single month. That year, global gaming revenue surged by 23 percent, as millions who wouldn’t have classified themselves as gamers started picking up controllers and booting up PCs.

When the Playstation 5 debuted in November 2020, seven years after its predecessor, it felt like a testament to the resilience of the gaming industry, even as other sectors struggled with pandemic challenges. By July 2021, Valve unveiled the Steam Deck, a handheld console allowing Steam games to be played anywhere, with preorders selling out in mere hours.

Simultaneously, YouTubers and Twitch streamers gained traction, while millions at home turned to gaming streams for entertainment. The power dynamics of the gaming industry began to shift dramatically. Microsoft acquired Activision Blizzard and ZeniMax Media, and Sony responded by purchasing Bungie in 2022 along with a $1.45 billion investment in Epic Games. Job listings in the gaming sector grew by 40 percent during the pandemic.

However, the advent of AI has triggered a random-access memory shortage dubbed RAMaggedon—and it’s stalling all this progress.

The swift expansion of artificial intelligence has disrupted every facet of the tech industry. Nearly a third of adults and the majority of teens in the US utilize AI daily, according to Pew Research. Data centers have doubled across the US since 2022, driving electricity costs up as much as 267 percent for households near these facilities, as reported by Bloomberg. The US accounts for over half of “hyperscale facilities,” specifically built for AI, many of which represent multibillion-dollar investments.