AI world models set to transform the $190 billion gaming industry through interactive 3D environments

The video game business is heading toward a big change as new artificial intelligence systems learn to build interactive 3D spaces. Tech companies say these tools could transform how games get made.

Leading research teams at Google DeepMind and a billion-dollar startup called World Labs, started by AI researcher Fei-Fei Li, are developing what they call “world models.” These are AI systems that can understand and recreate physical spaces, and experts think they’ll shake up the gaming business.

Shlomi Fruchter helps lead DeepMind’s Genie 3 project, which builds these world models. He said game-making is going through major changes. “Creating software and games in particular is changing a lot, and I expect it to change, maybe entirely, over the next few years,” Fruchter explained to the Financial Times. He thinks the technology will help people who make games work faster and better, opening up new possibilities that don’t exist right now. But he doesn’t expect it to completely take over current methods.

Other AI companies like Elon Musk’s xAI and Nvidia are testing these world models for robots and self-driving cars. However, the gaming world offers quicker opportunities for profit. Research firm Newzoo expects the gaming sector to bring in close to $190 billion this year.

AI is already changing how studios work

Game makers already use AI tools to design backgrounds and create characters. Back in May, Epic Games and Disney added an AI-powered Darth Vader to the game Fortnite. They built this Star Wars character using technology from Google and ElevenLabs, making him an interactive character that players could engage with.

Alexander Vaschenko runs Game Gears studio, where AI has sped up work on titles like Aliens vs Zombies: Invasion by four times. “Based on my professional experience, I firmly believe that both the video game and film industries will soon be unable to function without AI,” Vaschenko said.

AI firms believe newer, stronger world models will push more game companies to adopt this technology. These models can build 3D interactive spaces just from written descriptions. World Labs released a model called Marble last month. Another company, Runway, which partners with game studios, put out its first world model in December.

Li said this technology will affect major game engines like Unity and Epic’s Unreal. “This is all up for disruption,” she stated, adding that simulation gaming engines need upgrades.

Looking ahead, AI experts say regular players will be able to design their own game worlds. Developers won’t need pricey software or special training to make content. Eric Xing, who leads the Mohamed bin Zayed University for Artificial Intelligence in Abu Dhabi, explained the impact. “Now a gamer in front of this world model can put themselves into a virtual world,” Xing said. “That makes the game industry very different from today, because producing a personalised game is now a straightforward process.”

Workers raise concerns about job security

Not everyone sees this as progress. Critics worry AI will cost jobs for developers and artists, and flood games with cheap, low-quality content that people call “slop.” Six video game worker unions across Europe spoke out against AI use in their field this month. They said companies are forcing these tools on workers even though they make working conditions worse.

Those who support AI use say it could lower costs, boost creativity, and prevent worker exhaustion. This matters in an industry where top games, called triple-A titles, can take multiple years and more than $1 billion to finish.

Alexandre Moufarek at DeepMind used to work as an associate producer at French game company Ubisoft. He hopes world models will give developers room to “find the fun” and “try new ideas and take risks again.”

“Often, that’s the time that’s missing at the end of the production. Christmas is coming, and you need to release the game, and you just don’t have time to polish the things that you wanted [or] debug things correctly,” Moufarek said. “The more we put those models in the hands of creatives, I’m sure we are going to discover new ways of working that we haven’t even anticipated yet.”

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