The Ambition and Reality of AI Transforming Game Development

The empowerment of AI in the gaming industry is becoming a consensus.

However, finding quality gaming investment targets and teams has become a new challenge.

Recently, Century Huatong (002602.SZ) launched the global AI gaming and application innovation competition "Shulong Cup," aimed at discovering outstanding AI talents and teams for the industry.

The award-winning AI gaming projects cover different aspects of game development, including design and content.

Among them, content generation and interaction are becoming the key applications of AI games, which can generate plots based on context and drive the progression of game narratives.

However, as the development of AI games is still in its early stages, AI-generated content cannot yet be directly used in the narrative structure of games, and there are still many stages that require human intervention.

However, the greater challenge lies in how games can achieve more gameplay innovations under the drive of large models after the explosive expansion of the game supply side brought about by AI tools enhancing efficiency. This may be an important issue that all parties will face in the future.

Concrete Penetration

Currently, AI's involvement in games is mainly reflected in design aspects such as art.

For example, Century Huatong's AI tools cover original painting design, concept creation, character illustrations, 3D modeling, etc., significantly replacing traditional development processes.

"The group and its subsidiaries have signed cooperation agreements with many startups in the AIGC field, covering multiple stages of content production from original painting generation to video production and 3D modeling," pointed out Huang Hui, Chief Strategy Officer of Century Huatong Group.

Although the lack of computing power and personnel proficiency has not allowed AI tools to demonstrate significant cost reduction and efficiency improvement capabilities, this direction has long become an industry consensus.

However, after production efficiency is greatly improved, how AI can truly enhance player experience from a gameplay perspective is receiving attention.

With the rapid advancement of large models, there have indeed been more innovations in game interaction methods and content generation logic this year, becoming a near view of AI games that all parties can see.

As a judge for this Shulong Cup, Huang Xinxin, head of the 3i incubation business at Guangyuan Capital, pointed out, "The core capability of this generation of AI is to summarize reasoning and induction based on historical data. Therefore, we believe that the generational revolution in the gaming field is likely to be in the reconstruction of AI-driven native content generation architecture and interaction methods."

Cases Emerging

Many of the AI games that stood out in the "Shulong Cup" showcased characteristics of interactive innovation.

The game "Mysterious Reasoning," which won the "Best AI Game Content Design Award," allows players to play as a new agent and search for clues in conversations with NPCs played by AI.

It is worth mentioning that the AI NPCs in this game have strong anthropomorphic characteristics, covering various subplots, including confrontational dialogues.

According to the development team BC Studio, if players talk nonsense, the NPC will respond: "Last time you said you were a top student from the police academy, how come you can't even extract fingerprints properly?"

Some players even cursed the NPC, saying, "What are you being arrogant for, you're just a virtual character made of code," but the retort they received was, "At least my memory doesn't frequently make mistakes like some people." This has, to some extent, enhanced players' sense of immersion.

Winning the "Best AI Game Innovation Award," "1001 Nights" is a story-building game based on a large model, utilizing the ZhiPu large model in the cloud, which generates weapon cards with different attributes based on context to advance the game.

There is not much innovation in the storyline, mainly referencing the story "One Thousand and One Nights," where the tyrannical King Shahryar suspects his wife of infidelity and marries a new bride every day, only to execute her the next morning. Players primarily take on the role of Scheherazade, becoming the king's next bride and enticing him to reveal various weapons like knives and swords, which serve as tools for revenge.

The innovation mainly lies in the AI's portrayal of the king, who can generate real-time dynamic content based on the player's different inputs, driving the story's progression.

Additionally, Century Huatong's hit game "Endless Winter" also incorporates some AI-generated plotlines, providing players with a new experience to some extent.

However, since the integration of AI in the gaming industry is still in its early stages, the practical application of AI-generated content still requires manual modification, making it difficult to achieve completely personalized content for every player.

Taking Century Huatong's "Endless Winter" as an example, Fang Hui told Xin Feng: "(This game) mainly combines AI for plot generation during the planning stage, but still requires a lot of manual editing, and it has not yet achieved real-time synchronization of AI and player content."

One reason why AI-generated content cannot be directly used in practice is that it lacks dramatic plot design.

"Model vendors generally adopt cautious output strategies to ensure the reliability of their model's output, which leads to content that often leans towards stable narrative. For example, even in strong narrative fields like romance simulation games, AI still struggles to break through the threshold of dramatic creation—this is precisely the experiential barrier that the next generation of technology urgently needs to overcome," Huang Xinxin told Xin Feng.

Huang Xinxin gave an example: "It's like chatting with a general dialogue AI like Doubao; it usually outputs some consensus content. At this stage, creative AI also needs to break through its comfort zone."

Focus on Early Stages

Affected by the high prosperity on both the supply and demand sides of the gaming industry, many game companies have turned losses into profits this year.

In the first half of 2025, Century Huatong's net profit attributable to shareholders increased by more than 100% year-on-year; during the same period, Youzu Interactive (002174.SZ) saw its net profit attributable to shareholders increase by more than 700%; and Perfect World (002624.SZ) is expected to achieve a net profit attributable to shareholders of at least 480 million yuan.

The supply side is welcoming favorable policies. In just the first half of this year, over 800 game licenses were issued, a year-on-year increase of more than 20%.

As the issuance of licenses accelerates, the industry urgently needs AI to enhance production efficiency and innovate gameplay to cope with fierce market competition.

Currently, investments from various parties are mainly focused on the infrastructure needed for game development, such as computing power and large models.

Century Huatong is advancing the construction of computing power centers in the two core regions of the Yangtze River Delta and the Pearl River Delta; SANQI HUYU (002555.SZ) has invested in large model companies like ZhiPu Huazhang and edge GPU cloud computing service company Tingyu Technology, among others; miHoYo has developed the Glossa large model and others.

This provides underlying resource support for development to some extent.

Compared to the hot AI infrastructure, investment in AI game projects is relatively low.

A game industry insider in Beijing revealed to Xin Feng that investment institutions are currently in the early stages of investing in AI games, focusing on the first round, with very few reaching the third or even fourth rounds.

Each party has its own logic for identifying a good AI game.

Fang Hui believes that evaluating an AI game first requires attention to the team's understanding of the target audience; secondly, the project must have high-quality gameplay and content to ensure the game's fun and appeal; furthermore, the application of AI technology in the game must be closely integrated with the gaming experience, addressing the contradiction between the game's convergence and the openness of AI.

In his view, the team's understanding of large AI models and their ability to train in vertical fields are also important considerations.

Some investors are more focused on gameplay innovation. Huang Xinxin believes that simply embedding AI large models into traditional games is not the ultimate state presented by this generation of AI games. From the perspective of light sources, there may be more focus on disruptive innovation in AI-native scenarios.

“For example, we recently saw a team that is based on a classic game IP from 20 years ago, using current 3D engines and generative AI to reconstruct an open-world narrative. I think this kind of disruption is something that the AI era should try to explore, rather than being satisfied with adding AI interactions to classic gameplay,” Huang Xinxin pointed out.

(Interns Yao Tong and Zhao Qian contributed to this article)