Four Ways Generative AI Will Transform Gaming

Scenes from Generative: LA

Lightspeed recently hosted the latest in its Generative AI series, “AI in Gaming,” in Los Angeles. Lightspeed has been investing in AI for over a decade, and launched the meetups to bring together founders, builders, and investors working in the generative AI space to trade ideas and learn from each other.

The panel was organized and moderated by Lightspeed partners Moritz Baier-Lentz, who heads the firm’s gaming practice, and Faraz Fatemi, who focuses on investments in consumer platforms. The two were joined by panelists Ken Wee, Chief Strategy Officer of Activision Blizzard, and Ankur Bulsara, Co-Founder and Chief Technology Officer of Scopely. They brought predictions and deep expertise to the topic.



Four insights from the discussion:

1. Generative AI will revolutionize game development

Game development has historically demanded vast resources in terms of time, talent, and financing. AI promises to reduce those barriers in the same way that music production software has allowed resource-strapped musicians to produce high-quality material in their homes instead of expensive studios. AI is “the most accessible computing platform we’ve ever had in the world. And that means everyone in this room can be a coder, artist, screenwriter, game designer, or anything else they desire,” according to Bulsara. 

With lower production costs and technical barriers, more people will try their hand at developing games. Even though Activision Blizzard employs north of 11,000 people, according to Wee, “We [still] don’t have the people or the resources to give consumers enough content, so AI is an incredible opportunity for us to deliver even more content to players. And beyond productivity gains and development speed, AI will also unlock new game genres and design possibilities, so consumers can expect a windfall of new choices.”

Of course, with so much new output, consumers could find themselves overwhelmed with choices and upstart companies might struggle to break through all the noise.

2. Incumbents will benefit, but gaming startups have a true opportunity with emergent AI 

When platforms shift, opportunities are typically created for nimble startups that don’t have to deal with issues that established companies often face, such as established development processes and approvals, and tech debt. This is the newer companies’ path to becoming the next behemoths – and why Lightspeed is investing in startups like Inworld AI. However, AI does offer incumbents some significant advantages. According to Wee, AI promises to help established franchises such as Call of Duty increase its content offerings to its players. 

With AI potentially flooding the market with new offerings, incumbents will be able to capitalize on their name recognition. Similar to trends in the music and book publishing industries, gamer engagement may continue to concentrate in the largest franchises.

3. Concerns around existing IP

In the current discourse about AI’s potential, many people are concerned about what data sets are used for training. Artists and writers are especially worried that their copyrighted work could be used by AI to build games—or write scripts or create images—that they don’t receive royalties for. However, the panelists suggested that this concern is on its way to being properly addressed. Bulsara used the example of AI initiatives at Adobe, which he said is “very serious” about tackling the problem and has strict rules about proper attribution. He also said that Scopely closely tracks attribution and strives to ensure that copyrighted works aren’t used in their design process. Wee said that litigation IP risk is something to take very seriously, especially for larger incumbents.

4. AI can quickly fix “pain points” that have long nagged companies

Every company has problems that go unaddressed for too long, either because of cost or lack of resources. AI promises quick and affordable ways to clear out a company’s backlog of niche “pain points.” According to Wee, Activision Blizzard just teamed with an AI startup, Modulate, working to limit the sort of toxic and offensive language that has long affected many gaming platforms. The collaboration addresses “a massive problem for us,” he said. “It solved something that we were not doing because we didn’t have enough resources.” 

Bulsara, for his part, cited a recent collaboration with an AI voice generator that helps Scopely add voices to their advertisements. This function used to require a lot of time, meaning that the company often avoided doing it. The platform has helped increase ad conversions and now Scopely uses the option often. Hundreds of new AI startups promise to address similar problems for companies; in the gaming space specifically, they specialize in problems related to the creation of art, animation, sound design, and a variety of other production processes.

It was also noted that perhaps one of these smaller, niche AI startups will become the next big thing—or at least grow to a size that makes them an appealing investment opportunity.

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