How Will Generative Ai Change The Video Game Industry

Bonisiwe Shabane

-Nov 18, 2025, 8:57 AM

how will generative ai change the video game industry

Executives see AI improving quality and speeding time to market but not alleviating the talent shortage. By Anders Christofferson, Andre James, Tom Rowland, and Imogen Rey Generative AI is just beginning to have an effect on video games, but gaming industry executives believe that over the next 5 to 10 years, it will contribute to more than half of the... Bain spoke with gaming industry executives about the potential and the challenges of generative AI for their industry. Most have high expectations for generative AI and the machine learning it’s based on, and they expect it to have a greater effect on their business than other transformative technologies, such as virtual reality... Most of these executives see generative AI improving quality and bringing games to market faster.

Generative AI will also help make bigger, more immersive, and more personalized experiences a reality. Interestingly, only 20% of executives believe that generative AI will reduce costs, which might be a disappointment to some, given that top-tier games may cost as much as $1 billion to develop. As with any form of automation, there may be concerns about generative AI taking jobs. But most of the executives we spoke with (60%) don’t expect generative AI to have a significant effect on their talent model or alleviate the industry’s critical talent shortage. The video game industry has seen unprecedented growth in recent years, with online gaming exploding in popularity during the global COVID-19 pandemic. As millions of players worldwide sought new ways to connect, compete, and immerse themselves in virtual worlds, gaming became a vital source of entertainment, social connection, and even stress relief.

Today, more than 2.6 billion gamers actively engage in gaming experiences globally, which is expected to grow exponentially. By 2027, it is projected that 70% of U.K. residents will be classified as gamers, signaling the increasing influence of gaming in our daily lives. A key driver behind this growth is the evolving role of Artificial Intelligence (AI), which is becoming a transformative force in the gaming industry. AI technology is not just enhancing gameplay; it’s fundamentally altering how games are created, played, and experienced. Generative AI stands out as a game-changer among the many areas where AI is making a significant impact.

This technology automatically creates dynamic, interactive game content from characters and dialogue to entire worlds based on algorithms rather than manual programming. Generative AI has the potential to revolutionize how developers build immersive environments, create intelligent NPCs, and even personalize gameplay experiences. In this blog, we’ll explore how generative AI is set to reshape the future of video games. With the growing adoption of Augmented Reality (AR) and Virtual Reality (VR) and the increasing demand for interactive, personalized gaming experiences, AI is poised to take gaming to new heights. As this technology continues to evolve, it promises to enhance player immersion and creativity, streamline development processes, reduce costs, and unlock new possibilities for game designers. Let’s dive into how generative AI will change the landscape of the video game industry in the coming years.

Also Read: The Transformational Power of AR and VR in Gaming Generative AI is a class of artificial intelligence algorithms that can create new content based on learned patterns from existing data. In the context of video games, this technology can potentially transform various aspects of game design and player experience. By using generative models, developers can produce everything from intricate game environments to complex character behaviors while reducing the time and resources traditionally required for game development. There's one topic that's stayed on my mind since the Game Developers Conference in March: generative AI. This year's GDC wasn't flooded with announcements that AI is being added to every game -- unlike how the technology's been touted in connection with phones and computers.

But artificial intelligence definitely made a splash. Enthusiasm for generative AI was uneven. Some developers were excited about its possibilities, while others were concerned over its potential for abuse in an industry with shattered morale about jobs and careers. AI has been a common theme at GDC presentations in years past, but in 2024 it was clear that generative AI is coming for gaming, and some of the biggest companies are exploring ways... With all new technologies, there's no guarantee they'll stick. Will generative AI flame out like blockchain and NFTs, or will it change the future of gaming?

In prior years during GDC, San Francisco's Moscone Center convention venue has been awash in banner advertisements from game companies touting their use of the latest trendy tech: cryptocurrencies, blockchain, NFTs and Web 3.0. This year was no different, with ads from smaller companies expounding on their AI integrations. Gaming's biggest companies are still hesitant to commit to including AI in their plans. Nvidia and Ubisoft showed off their dynamically responding nonplayer characters at GDC 2024, but they haven't announced grand plans to integrate them into upcoming games. Microsoft announced last November that it's partnering with Inworld AI to develop AI game dialogue and narrative tools. (Inworld is the company Nvidia and Ubisoft teamed up with on their AI NPCs.) But the only generative AI that Microsoft is rumored to be developing is an Xbox customer-support chatbot.

Generative AI offers exciting new ways for video game developers to create engaging content, realistic visuals, and immersive gameplay experiences. In this article, we’ll explore how generative AI can enhance and accelerate game development – with a few examples. Let’s break down some of the main elements of game development and see how generative AI can facilitate the process: It’s no wonder the developer of Assassin’s Creed, Jade Raymond, says AI in the development of big-budget games is “unavoidable” due to its ability to cut expenses and speed up game development. Another way generative AI can add value to video games is in-game testing and quality assurance. For one thing, generative AI can be used to automatically detect bugs and defects in games, and rank them according to priority and their impact on the game.

Plus, the predictive capabilities of AI mean it can be used to analyze data to predict potential issues within a game, allowing developers to take proactive action. Generative AI can also be used to create multiple simulated players (i.e. bots) to test the game, all playing in different ways according to their AI-generated play styles. This allows game developers to quickly work out where players get stuck, where players are most likely to spend money (on in-game accessories), and which factors lead to less satisfying gaming experiences. BOT or NOT? This special series explores the evolving relationship between humans and machines, examining the ways that robots, artificial intelligence and automation are impacting our work and lives.

by Thomas Wilde on Dec 27, 2023 at 8:00 amJanuary 2, 2024 at 9:26 am Video game companies are dipping their toes into the rapidly-evolving world of generative AI with behind-the-scenes development. It may soon be applied to actual gameplay. A recent example came earlier this month from the Seattle-based creators of the popular social app Rec Room, which debuted Fractura, an in-game room created as a “research project” to demonstrate how players can... The Seattle startup evaluated more than 20 different tools in the process of designing Fractura, such as ChatGPT to develop and iterate on their ideas, including the creation of a “bible” for Fractura’s backstory. It visualized ideas via Midjourney and DALL-E, and turned the resulting images into 3D assets with CSM and Shap-E.

Finally, Fractura’s alien skies were built out with Skybox, an AI tool from Blockade Labs. Generative AI in video game development could transform the way people work or fail to match human creativity. On Monday, The New York Times profiled efforts to add generative AI content to live gameplay experiences, as well as how game developers are using generative AI behind the scenes. As in other industries, the use of generative AI in game development raises questions. Will it eliminate jobs? Will it diminish human creativity?

Or will it become an essential skill that unlocks new opportunities? The 2025 State of the Game Industry report, released in March 2025 by Informa Festivals — the company behind the Game Developers Conference — found that one-third of developers use generative AI to streamline... Generative AI can be used in games for prototyping, initial concept development, or the automatic creation of dynamic landscapes, sound effects, and other in-game elements. Video game companies continue to explore player-facing uses for generative AI. In March, a leaked demonstration produced by Sony showed the character Aloy from the Horizon franchise responding to prompts with AI-generated, real-time dialogue. It could make working conditions more bearable—or it could just put people out of work.

This story is from The Algorithm, our weekly newsletter on AI. To get it in your inbox first, sign up here. Video game development has long been plagued by fear of the “crunch”—essentially, being forced to work overtime on a game to meet a deadline. In the early days of video games, the crunch was often viewed as a rite of passage: In the last days before release, an obsessed group of scrappy developers would work late into the... However, nowadays the crunch is less likely to be glamorized than to be seen as a form of exploitation that risks causing mental illness and burnout. Part of the issue is that crunch time used to be just before a game launched, but now whole game development periods are “crunchy.” With games getting more expensive, companies are incentivized to make...

But what if AI could help to alleviate game-development hell? It may already be happening. According to a recent poll by a16z, 87% of studios are using generative AI tools like Midjourney to create in-game environments. Others are using it for game testing or looking for bugs, while Ubisoft is experimenting with using AI to create different basic dialogue options. Generative AI is transforming games, moving from static experiences to "living games" that dynamically adapt and create content in real-time based on player interactions. Over the last decade, online connectivity has redefined how we interact with games.

Instead of a game you buy and complete once, live online games create fresh content, novel features and thriving communities. Something new is always happening in the game, which gives players a reason to jump back in. Now, generative AI (gen AI) is taking things to the next level with “living games” — games that adapt, grow and evolve themselves. Imagine a game that can learn how you play and adjust the environment, characters and storylines to fit your unique playing style and skill level. Picture building entire worlds, the perfect mods or custom game items just by describing them. Or having conversations with virtual characters that feel as natural as talking with another human player.

These are the kind of experiences gen AI makes possible. To stay relevant and exciting, games must constantly evolve to engage existing players and attract new ones. Game developers learn from player data to help them make informed decisions about what updates and features to add. While AI has helped game makers automate sifting through data and detecting connections and trends, lengthy development cycles and manual processes have historically meant game updates lag months behind timely user requests and shifts... Now, leaders in game development are using gen AI across their production process to create new content faster — from initial ideas to concept art to dialogue and more. This is key as development costs continue to rise, AI frees studio staff to focus their efforts on the most important and interesting creative and development challenges.

How Will Generative Ai Change The Video Game Industry

People Also Search

Executives See AI Improving Quality And Speeding Time To Market

Generative AI Will Also Help Make Bigger, More Immersive, And

Today, More Than 2.6 Billion Gamers Actively Engage In Gaming

This Technology Automatically Creates Dynamic, Interactive Game Content From Characters

Also Read: The Transformational Power Of AR And VR In