Written by Michail Katkoff, founder of Deconstructor of Fun and a games industry veteran with 15 years of experience in building, operating, and scaling games and game companies.

Legendary game makers, Peter Molyneux who is renowned for creating the god games Populous, Dungeon Keeper, and Black & White, as well as Theme Park and the Fable series thinks that generative AI is going to be a "real game changer" in video games.

In his latest interview, Molyneux told Eurogamer that everyone will be able to "create a game from one single prompt such as 'Make a battle royale set on a pirate ship.'" These were among Molyneux's predictions for where video games would be in 25 years.

We here at Deconstructor of Fun are far from creative geniuses. Unlike Mr. Molyneux, we don’t have the experience of crafting extraordinary games for decades on multiple different platforms. Thus we will limit our prediction of AI to what we think will happen in the not-so-distant future.

The three predictions for the AI x Game Industry in 2025:

Games made by AI will fail to impress both the player and the publishers.
The first iteration of AI tools for game development will not have the impact investors were dreaming of.
The game industry will witness the first waves of layoffs directly tied to the rapid adoption of AI in 2025.

Now that we got the predictions out of the way, let us explain how we arrived at the conclusions.

Executive benefit from AI adoption, the employees not so much…

Before making predictions about AI’s impact on the industry we have to answer a simple question: How likely is the widespread and quick will the AI adoption be?

I assume most of you will conclude that adoption is already happening at all levels of our society and that the speed of adoption seems to be only accelerating. Only regulations could curb the advancements of AI - and there are not many of those being passed despite experts sounding the alarms.

AI promises to enhance productivity, efficiency, and creativity. It is a true enabler. Yet I believe it is disingenuous to talk about the adoption of AI without addressing the direct impact it has on the jobs in the gaming industry.

And there lies the challenge.

AI is a revolutionary force that is transforming how we make games. Companies that fail to streamline their processes with AI are putting themselves at a disadvantage from cost and speed perspectives.

The leadership understands this very well. Their challenge is to make their teams adapt to this revolution that may very well lead to them and/or their coworkers losing their jobs. I believe this is why so few companies and their executives want to talk about the investments or usage of AI more openly. Or admit that AI is responsible for some of the layoffs we’re already experiencing.

The promise of AI in gaming is Twofold

Firstly, AI will allow smaller teams to execute their unique creative vision without being held back by resource demands. This leads to more unique games entering the market. We know that large studios can’t afford the risk of making much else than sequels due to their cost structures.

Secondly, AI will help large teams to create exponentially more immersive titles. Truly open worlds populated by procedurally developed content, adaptable game mechanics, and narratives. AI frees up developers to focus on more creative aspects. Or it will just free up developers allowing the studios to improve their cost structure.

How AI has already influenced layoffs

More than one-third (37%) of business leaders say AI replaced workers and 29% of employees say that their work tasks are replaceable by AI (source: CNBC)

AI-related job cuts are becoming common in the broader tech industry. Companies providing online assistance have downsized their staff after their businesses were directly affected by AI products. On the other hand, companies like Dropbox shifted their focus towards AI, resulting in layoffs to make room for new hires with AI skill sets.

I believe that the games industry will follow the tech industry on delay and we will begin to witness layoffs due to AI adoption/investments.

Here’s how AI will likely lead to layoffs in game development in addition to a decrease in jobs across marketing, HR, communication, accounting, etc.

Artist Jobs: streamlines the creative process with AI tools and reduces the need for internal and external artists.
Programmer Jobs: AI is revolutionizing game engines by automating various components, such as physics and graphics rendering engines to optimize performance.
Designer Jobs: AI-driven procedural content generation (PCG) algorithms generate game content dynamically. This includes creating levels, missions, and even entire game worlds.
QA, Localization & Producer Jobs: AI automates bug detection and optimization reducing the need for the QA teams of sometimes hundreds. As these and other teams downsize, the studios will need fewer producers.

When talking to studio executives, they seem to be unanimously in agreement that AI will affect entry-level jobs the most while allowing the more senior staff to become even more productive.

In the short term, this is ideal. Supercharged compact and experienced teams are the dream of every studio executive and talent alike.

Yet in the long term, entering the industry will become even more difficult due to the decrease in entry and staff-level jobs. Many of today’s gaming leaders started as testers, junior programmers, and artists. It’s How will tomorrow’s gaming leaders get the start to their careers if the adoption of AI is robbing them of the opportunity to an entry-level position?

AI Bear and Bull Cases

The gaming industry is reshaping to become more efficient and durable during lean times, with companies focusing on core competencies and leveraging third-party vendors for non-core tasks. Advancements in AI and tech tools are expected as part of this macro trend driving industry changes as companies focus more on profitability over growth.

The streamlining of game production processes is a blessing for the longevity of the industry. Most AAA simply cannot afford the team sizes of today. At the same time, I believe that AI will lead to even more job losses. This is incredibly unfortunate, as the industry is already being hammered by an endless onslaught of layoffs aka. “rightsizing”.

But while AI tools offer a lot of efficiencies, they can also lead to the overall market experiencing a massive drop in the quality of games in the short term.

In the Gamecraft podcast, Benchmark’s Mitch Laskey and Blake Robbins discussed the bull and bear cases for AI in gaming.

The bull case: AI will supercharge indie developers allowing them to challenge large AAA by removing production constraints. Albeit the marketing constraints would remain.

The bear case: the market will be flooded with low-quality throwaway games. A hypercasualisation for the market, if you will. This in turn would give more power to quality developers that hold IPs while killing the indie scene with a flood of copycat products.

I’m inclined to share the sentiment of Mitch and Blake. Looking at the pitches, there’s a high likelihood of made-by-AI games giving the market the “hypercasual” treatment. To be blunt, trashing it with low-quality and high-attention-value products.

Embrace and Adapt

What can and should we do about all of this? Fighting against the AI revolution is not the answer. It feels almost as foolish as embracing everything AI.

What’s left is being diligent, strategic, and focused on the long term. In practice, this means constantly evaluating various AI tools and working transparently with the staff when doing these evaluations.

In my opinion, the goal should be for AI to help the existing team to complete tasks faster, and with better quality. Involving the team in the evaluation of AI-enhanced solutions is a better way than top-down mandates.

But most importantly, I believe that leadership needs to be open about the goals for adopting AI tools. Discuss in a transparent way why costs matter and how excluding oneself from the progress may actually put the company at risk in the long run. Even then you won’t have all of the employees on-board. But at least everyone will know the company’s stance and make their own decisions whether they want to be a part of this direction or not.