Insert Coin, Respawn: Is Gaming the Real AI Sandbox?

💡The Rise of Generative NPCs

If gaming is the AI sandbox, Inworld AI sits right in the middle of it.

Inworld is one of the best funded startups in Gaming x AI. They started in 2021 and have since raised $120 million and were valued at $500 million in 2023.

One of their main products? A Character Engine that lets developers create AI-powered NPCs. These NPCs are capable of real-time dialog. They have memory and a distinct personality.

One of the most striking demos (and live beta on Steam) comes from Team Miaozi. In the video below, we can see that the interaction with the NPC feels very alive. And it’s not just creating dialog. The developers say that the narrative can evolve as you play.

In a survey conducted by Inworld, 99% of gamers asked would expect that AI enhances game experiences. We can already see that in the demo video above.

Most people, myself included, are looking forward to the improvisational play. Every gaming session can feel completely natural, not scripted, and very real. But with the lightweightness of being just a game.

Inworld mentions a range of innovative ways they see AI agends and NPCs evolve:

• Dynamic and procedural quests — quests adapt to the players background, location, actions and past interactions with NPCs.

• AI game director — It monitors the players progress and can adjust difficulty, pacing and present different puzzles that fit perfect to the players skill.

• Adaptive combat — Every gamer knows that current game AI has flaws and never feels actually smart. Predictive behavior and glitches are common. If enemy behavior can be driven by AI that can reason then we are entering a new world of combat systems.

• Relationships with NPCs — These will likely start to feel very real. One can only imagine the possibilities but also risk with this.

• Populated worlds — AI can enable it to quickly make a virtual world feel very alive. Every NPC can have a distinct life within this world, even interacting and building a social ecosystem with other NPCs.

Games That Are Already Using It

A few games live on Steam are experimenting with these tools right now — while results are mixed, gamers agree that they point to a very real future.

Cygnus Enterprises

The gameplay of an action RPG Shooter with base management features AI NPCs, as shown in the YouTube video above. It has mixed reviews. Players describe it as a new experience, but many call out that it lacks in many areas, like base building and the interaction with NPC can be glitchy.

Vaudeville

Vaudeville is a AI-Driven detective game. It’s got mixed reviews. Some reviewers complain about confusing responses from the AI. But some players love the interaction.

Most players know that this is only getting better and can agree that this is a very real path to the future of gaming.

Remember the first iPhone games? Weird, glitchy but fun and different. It’s just a matter of time for the first breakout title that blows us away.

Retail Mage

You are employed in a Mage store. You serve customers and can say and do almost anything you want. It’s a creative co-op game that sounds pretty interesting. Although it has positive reviews, only 40 players gave it a review.

StatusKwoh’s review: “I've never played a game quite like this one, felt very cool to watch the game react and play along with just about whatever I tried to do. Not everything worked, but that’s also what made it kind of fun.”

AI as a Co-Pilot for Game Designers

Game creation is hard. But it used to be so much harder. 

Back then, developers had to build everything from scratch — even the physics engine.

Tools like Unity changed that. Unity offers ready-made engines and asset libraries so that game developers can focus on gameplay and the creative spin to put on their games.

And now AI is pushing things even further.

Imagine the way you develop a game described purely in plain English: “Make zombies appear that chase the player,” “The floor is lava,” “Add a little village with a pre-built ecosystem to the map over here.”

Suddenly engineers aren’t the bottleneck. You don’t even need a team to get something playable live on steam.

It’s not just about saving time — it’s about who can build. A lot more people can test an idea without knowing how to code. Will we get more weird stuff? Yes… But there might also be a lot more excellent creative ideas.

Unity Muse

This is next level Unity. Muse AI lets creators use generative AI tools to build and tweak their assets directly within the engine. They can even use text prompts to create animations for their characters.

Users can setup behavior between characters as well as generate textures and structures with just text prompts.

Roblox Studio with AI

Roblox Studio leverages generative AI in a similar way. Create objects, populate a scene, create materials and style and restyle all through text prompts.

Insert Coin, Test the Future

Games are a perfect playground to test what AI can really do. They can be test labs.

We can create entire digital worlds and let the AI run free, or make it easier for even non-developers to create the worlds of their dreams. Just drop the AI in a virtual world and… see what happens.

As we can see in the game examples above, AI-driven features still feel like add-ons rather than part of the complete design. But there are signals in game development that a deeper shift to AI-native games is coming. Soon, we will see AI-native games built around systems that learn, evolve, and present us with unexpected turns.

Games give developers a lot more freedom than productivity tools. We can really open our minds to entirely new mechanics.

The AI that will power many business processes in the future is being playtested in games now.

And if the virtual experience breaks? No problem.

Just insert coin and respawn.