"We are testing an Xbox Support Virtual Agent, an internal prototype of an animated character that can query Xbox Support topics with voice or text," Haiyan Zhang, general manager of Gaming AI at Xbox, told CNET in an emailed statement.

The animated character would take information from existing Xbox Support pages to provide answers to questions players ask, Microsoft says.

The chatbot could also process refunds for games, according to an earlier report by The Verge. 

Microsoft has eagerly adopted AI

The move marks another way Microsoft is incorporating AI into its product offerings. Building a chatbot that's designed to do more than merely answer questions expands well past the initial Copilot generative AI technologies Microsoft added to its Bing search engine and Office products, off the back of its investment and partnership with OpenAI.

Microsoft has hinted at these types of products before, though. CEO Satya Nadella has described using a voice-enabled AI to help people fill out forms, and the company has also demonstrated technologies that quickly summarize information from press releases, financial filings or meeting transcripts.

The tech giant has made AI such a central aspect of its products that it's added a dedicated AI Copilot button to keyboard layouts, the first change since Microsoft introduced the Windows key in 1994.

Microsoft hasn't said when its Xbox AI will launch, though the company is planning upgrades to its video game console and services soon. The company said it unintentionally leaked a presentation describing its upcoming "Brooklin" Xbox last year. The new device, which is reportedly discless, would sport a cylindrical design rather than the boxy design of the Xbox Series X (which has been made fun of in memes as looking like a refrigerator).

AI tech may help Microsoft's Xbox stand apart from Sony's upcoming PlayStation 5 Pro video game console, which is rumored to be coming out sometime this year. Apple is also reportedly looking to AI and planning its own AI enhancements for the iPhone, which may be announced as early as this summer during the company's Worldwide Developers Conference.