The Adoption of Generative AI in Video Game Production: Firm and Industry-level Dynamics

The video game industry has long used artificial intelligence (AI) tools to construct characters, scenarios, music, and for other production processes. The recent spread of widely accessible generative AI (GenAI) tools has introduced new challenges and possibilities to this industry. This chapter presents a small-scale study of the adoption and refusal of GenAI in video game production in four game development studios. We demonstrate that issues related to the quality of outputs and lack of integration of GenAI in the production process limit the adoption of the technology. Furthermore, while small studios utilise GenAI for operational and creative tasks such as prototyping art, communication, and data analysis, large studios are more hesitant to adopt this technology due to intellectual property protection issues, security, and technological readiness. However, large studios invest heavily in the research and development of complex GenAI applications, indicative of their potential to leverage their resources, partnerships, and market influence to retain market share relative to smaller game developers. We outline the implications of GenAI for firm-level and industry-level dynamics in the game industry.