AI takes center stage at GDC 2023 as Web3 loses its shine

Generative AI was the biggest talking point of GDC 2023, but few commercial products have so far reached the market. Meanwhile the metaverse, last year’s big theme, has taken a backseat, though there remain some reasons for cautious optimism.

AI's potential is clear—but the revolutionary products are yet to arrive

There was no doubt that generative AI was the biggest talking point of GDC 2023. Presentations and roundtables on AI were consistently packed out, the topic constantly popped up in casual conversations, and the big Game Developer Awards show was peppered with AI-themed gags. Attitudes among developers ranged from enthusiasm to apprehensiveness to outright hostility (the issue has tended to divide programmers, who are typically excited by the potential of AI-assisted coding tools, from artists and designers, many of whom fear their roles could be displaced by AI).

A certain body of opinion continues to see generative AI as the latest in a series of hype cycles – from stereoscopic 3D, to VR, to NFTs – that have failed to deliver on their exaggerated promises. The majority of developers, however, recognize that the rapid recent advances in AI technology and their clear and obvious use cases when applied to games development set this case apart from previous overhyped technologies. This is also Omdia’s view.

But while the sense that generative AI was going to have a major impact on the games industry was pervasive at GDC, AI was strikingly absent from the show floor. Few companies had AI-powered products to show off, and almost all of those on display were based on what could now be called “traditional” machine-learning technology rather than the more radical approaches demonstrated by the likes of ChatGPT and Midjourney 4. This should be no surprise. Those two models are less than five months old, and their even more capable successors launched just weeks before this year’s GDC. The sheer speed at which the technology has developed has created a limbo where the capacity of generative AI has become abundantly clear, but there has been little time to develop the raw potential into commercial products. As of March 2023, just 5% of vendors tracked by Omdia’s Games Tech Market Landscape had managed to bring AI-powered development tools to market.

That commercialization is a critical step to enable widespread adoption. The general-purpose tools currently available have mostly yet to be adapted to game development-specific use cases. More importantly, uncertainty over licensing and copyright issues means that developers are still unsure whether they can rely on AI-generated outputs. But the current limbo will not last long. The sheer scale of the opportunity for tech vendors who can capitalize on AI breakthroughs in areas from generation of textures to QA testing and voice chat moderation is generating a rush of investment that will soon translate into real products on the market. It's a safe bet that the GDC 2024 show floor will be teeming with AI-powered game development tools as a slew of companies jostle to carve out market share in this nascent segment.

Metaverse has muted presence, but some keep the faith

The metaverse is on a very different part of the hype cycle to generative AI. While the latter arrived as an instantly usable tool (and with instantly applicable use cases), the former remains no more than an idea, albeit one that many still believe to be worthy of investment.

The idea, and embodiment, of the metaverse could be divided into two main strands at GDC. One set of evangelists wish to tie this concept down to blockchain technology and NFTs. The general crypto downturn and a number of high-profile blockchain game failures have significantly dented enthusiasm for Web3 gaming since last year’s GDC, when it dominated the show. Nonetheless, there remained a significant show floor presence for this type of company. The tone is strikingly different, however, with NFTs and other blockchain technology now positioned as additive to the appeal of traditional games rather than being on the cusp of revolutionizing the industry. It remains to be seen whether the remaining enthusiasts can change consumer (and wider games industry perceptions) about Web3 and its accoutrements.

The second, and to Omdia’s mind far more promising, way of looking at the metaverse focuses more on gaming and/or immersive reality. Thus a large stand from Pico showcased its latest VR headsets and related experiences, with VR in general continuing to feel a few standout games away from a major breakthrough. Then there was the news from Fortnite while GDC progressed of Creator Economy 2.0, where 40% of Item Shop expenditure would go to creators. The immersive, ever more sophisticated worlds of Fortnite and Roblox (and perhaps BARB’s forthcoming title Everywhere) remind us that games worlds are the only metaverse in town right now, while their future possibilities remain enormous.

Appendix

Further reading

The Rise of Generative AI: A Primer (February 2023)

Metaverse Games Benchmark 2022 (July 2022)

Games Tech Market Landscape Database – March 2023 (March 2023)

Authors

Liam Deane, Principal Analyst, Games Tech

Dom Tait, Research Director, Games, Music, Consumer Platforms and AI

[email protected]