Summary of Key Points
AI is reshaping the gaming industry: It has evolved from using AI as a “production tool” (such as for creating art and writing storylines) to reduce costs and increase efficiency, to “AI-native games” where AI becomes the core of the gameplay, with storylines and NPCs changing in real-time based on player behavior. However, AI-native games face technical challenges (such as maintaining consistent character personalities and continuity of memory) and commercialization issues (the more player interaction, the higher the costs). A large amount of capital is flowing into the industry (AI-related projects accounted for over 70% of investments and financings in the first half of 2026), and companies are exploring breakthroughs, such as combining traditional games with AI elements, providing B-side technical solutions, and developing UGC (User-Generated Content) platforms that allow ordinary people to create games in a similar way to making short videos.
I. From “Using AI in Games” to “AI as the Game” – The Fundamental Logic Has Changed
Previously, AI was merely an auxiliary tool for game companies, used for tasks like character design and dialogue writing to save money and speed up development (by 2025, AI had been adopted in 86% of gaming companies, with the highest penetration in the art production process). But now, “AI-native games” have emerged, where AI is no longer just a tool; it is the very heart of the game. Without AI, the game would not be playable at all. For example, in “Sherlock Holmes: Night Stalker,” all NPCs are driven by AI in real-time, responding to player interactions and remembering previous conversations. In “Meow Island,” the cat NPCs continue to chat and have their own stories even when the player is not playing. In the romance game “Star眠,” the AI partner remembers things the player said years ago. The storylines in these games are not pre-written but generated by AI based on the player’s choices, making each play experience unique.
II. Technical Hurdles: Why Haven’t AI-Native Games Become More Popular?
Although AI-native games sound exciting, scaling them on a large scale is difficult due to technical limitations. For instance, Cai Haoyu, a former co-founder of MiHoYo, started an AI company that developed several consumer products (like the AI companion “AnuNeko”), but all of them were discontinued. The current focus is on overcoming fundamental technical issues. For example, NPCs may suddenly forget previous conversations, their behavior may be inconsistent, and the overall game world may become illogical (such as flowers blooming in winter). These problems are common to all AI-native game teams, which is why many companies are investing heavily in research (MiHoYo plans to invest 10 billion yuan over three years). Investors are also betting on a technological breakthrough, with companies like Aishi Technology raising nearly 3 billion yuan and Muyan Zhiyu securing 300 million yuan in funding.
III. Challenges in Making Money: The Commercialization Dilemma of AI Games
The traditional methods of making money in games (buying in-game items, skins, and using loot boxes) do not work well in AI-native games because more player interaction leads to higher costs. Each interaction and scene generation consumes AI processing power (referred to as “tokens”), which can cost players between 2 and 12 yuan per hour of play. For example, the game “Historical Simulator: Chongzhen” initially sold for 48 yuan plus token fees but was later made free to allow players to directly interact with the AI. The industry is testing three approaches to overcome these challenges:
1. Combining Traditional Games with AI: For instance, “Supernatural Action Group” by Giant Network added AI characters that could deceive players like real people, resulting in millions of daily active users and revenue of 5 billion yuan, while still using traditional monetization methods (skins and items).
2. selling Technology to Other Companies: Companies like Superparameter Technology provide SDKs for AI NPCs, which is a more stable approach than developing consumer products.
3. UGC Creation Platforms: This is the direction that investors are most optimistic about. These platforms lower the barrier to entry for game development, making it possible for ordinary people to create games, similar to how TikTok has transformed the content creation industry.
IV. UGC Creation Platforms: Making Games Accessible to Everyone, Like Making Short Videos?
AI has reduced the barriers to making games to the level of creating short videos. You simply provide a description (e.g., “Create a game where you manage a cat cafe”), and AI generates the complete game for you. The logic of these platforms is similar to TikTok: they attract traffic through user-generated content and then earn money through advertising and subscription fees. Here are some examples:
- The international platform Astrocade allows users to create games with just a description; within 8 months, it had 20 million users, and some creators earned thousands of dollars per month.
- In China, TapTap’s “TapTap Manufacturing” platform led to the creation of the game “Jade Business Simulator,” which attracted 1.2 million players in two months.
- Tencent’s “Code Name Craft” offers thousands of pre-made art assets, enabling users to create games with a single click.
- Platforms like REDnote and TikTok are also integrating tools to allow users to share their own games. This direction could become a significant growth point for AI games, as it turns ordinary users into both players and creators.
Conclusion
AI has sparked a “fundamental revolution” in the gaming industry. Although technical and commercial challenges remain, capital and large companies are investing heavily. This transformation could change the game industry from being dominated by a few developers to being accessible to everyone, just as short videos have transformed the content creation industry.