The gaming industry has always been a pioneer in emerging technologies, and artificial intelligence is no exception. One of the most exciting breakthroughs for gaming has been AI-enabled nonplayable characters. By leveraging generative AI models, NPCs gain depth and dynamism that enable lifelike personalities and interactions — imagine an NPC that remembers past decisions, learns over time, and has its own goals and motivations.

Giving new life to previously static characters, AI NPCs can enable more immersive experiences, deeper storytelling, and stronger player engagement. Let’s take a closer look at how AI NPCs work, where they’re heading, and whether they truly have disruptive potential.

How It Works

The initial step of creating AI NPCs involves leveraging large language models to create a character “brain." By providing specific prompts and parameters to an LLM, developers can give NPCs personality traits, dynamic behavioral responses, and learning capabilities.

There are numerous companies working to build AI NPCs, including Inworld AI, Convai, and Charisma. Among these, Inworld is one of the leading platforms for AI character development targeted at gaming, and provides an engine for studios to create character brains at a much deeper level than general foundation models like ChatGPT or Google Gemini can offer.

By overlaying foundation models with purpose-built AI models and tools, these engines can give NPCs more depth in the form of emotional ranges, autonomous decision-making, and situational awareness based on player actions or past events. These layers help refine the character brain beyond what a rudimentary chatbot is capable of and are key to making NPC interactions more realistic. At the same time, these parameters help keep the NPC on topic for its game world and minimize overall hallucinations, a common drawback with generative AI.

Once the brain is created, Inworld provides APIs that allow these characters to be plugged directly into different game engines, such as Unity or Unreal, or game worlds like Roblox or Minecraft. From here, the characters can begin processing different input information from their game world, such as audio, visual or text cues, and coordinating outputs for the NPC that might come in the form of animations, gestures, text or speech responses.

Inworld AI: A Character Engine Example 

While companies like Inworld are helping studios develop the complex brains that power NPCs, others have focused on the infrastructure that brings NPCs to life within games. If Inworld creates the NPC brain, products like NVIDIA’s Avatar Cloud Engine create the body that allows for realistic in-game appearances and interactions. NVIDIA ACE is a platform that leverages NVIDIA’s proprietary AI models to enable advanced text-to-speech synthesis, realistic facial animations, and 3D rendering that help characters appear more lifelike.

At GDC 2024, Inworld and NVIDIA co-released Covert Protocol, a game demo where you play as a detective gathering clues from nearby NPCs. With Inworld, each NPC was given a unique personality, motivations, and knowledge necessary to solve the case. The player’s decision-making also influences the storyline.

Understanding each NPCs’ circumstance and behavior, which is crucial to progressing in the game, would only be possible with the subtle physical and emotional expressions that NVIDIA ACE allows for. In addition to NVIDIA’s AI models, the computational intensity of AI tasks means NVIDIA’s GPU hardware becomes as critical as the software to ensure smooth, low latency gameplay.

Current State of AI Gaming

Given the multiyear timeline for game development and the more recent acceleration in LLM capabilities, many AAA studios have yet to incorporate AI NPCs into gameplay. While large studios will eventually play a significant role in the future of AI NPCs, smaller teams and independent creators are leading the way in early adoption.

On platforms such as Minecraft and Roblox, creators have already begun adding AI NPCs directly into their worlds — these can include shopkeepers who can recommend purchases, guides who can give quests, or collaborative characters players can team up with.

Beyond mods for existing games, experimental projects such as Niantic’s Wol represent the early foray into AI-native gaming. In Wol, AI NPCs even leverage augmented reality to create real-world environmental awareness. After mapping a player’s nearby surroundings, the game transforms the space into a redwood forest that players and Wol, the game’s whimsical owl guide, can both interact with. As players explore the redwoods, Wol offers fun facts, tells jokes, and can answer questions about the surroundings. The addition of spatial audio and hand tracking further enhances the experience by adjusting to the player’s location and gestures.

As one can imagine, the cost to operate AI NPCs becomes a bigger issue as games scale up and NPC interactions multiply. Companies like Inworld typically charge on a usage basis (per interaction per production minute). Given the computational requirements of AI NPCs, the volume of queries, and associated memory/data storage, the cost-benefit analysis of AI NPCs becomes a key question for developers. While nongaming enterprise customers might have fewer total queries or care less about length of interactions with general AI agents, these elements are critical to game developers, where usage often correlates to player engagement.

The potential benefits of AI NPCs for retention and replayability are clear. For social games that rely on network effects, AI NPCs can help provide a quick start by populating worlds for early players. For games with steep learning curves, AI NPCs can serve as onboarding characters that can create more engaging tutorials and help players progress through early gameplay. AI-powered shopkeepers can even drive in-app purchases by recommending items that could be specific to a player or the stage they are at within a game. Over time, the costs to run AI should come down, given more available computing capacity and improved software and hardware efficiencies.

Additionally, the revenue model has been evolving to become less onerous on game developers, such as with fixed-cost pricing models that help cap costs or revenue-share arrangements for games predicated on in-app purchases or live services. Ultimately, the measurable extent to which developers can improve retention and replayability will drive the cost-benefit analysis of AI, but it’s clear AI NPCs can help create more engaging virtual worlds.

A Sustaining or Disruptive Technology?

Some view AI simply as a tool for improving existing games without ultimately changing the core experience — NPCs will become more dynamic, but the gameplay remains fundamentally the same. Others believe it’s a truly disruptive technology that will usher in a new wave of genres and mechanics. While the former is a value add for game developers alone, it’s the potential of the latter that has some developers and investors excited.

Gaming has always pushed creative boundaries, and finding unique ways to innovate with AI NPCs will be the key to unlocking its value. For example, AI NPCs can allow for more player-centric gameplay where NPCs become customized by adapting to player actions. This could result in truly personalized gameplay where each player’s storyline is unique and continuously changing based on the player’s mood or preferences.

For multiplayer games, AI NPCs could serve as co-op partners or rivals with their own goals and motivations. This could redefine the multiplayer experience as AI NPCs interact with the game world in their own unique and unpredictable ways, or allow for solo gameplay in a multiplayer setting. Additionally, AI NPCs could help gamify nontraditional markets, such as fitness or education, and onboard entirely new groups of “players” seeking personalization and more engaging progress tracking. While it will take many years for the AI gaming market to fully mature, long-term disruption from AI NPCs will only be limited by human creativity.

Outlook

AI NPCs are gaining steam, and we’ll continue to see more instances of studios embedding AI into their development pipelines. Earlier this year, Ubisoft unveiled an AI project called NEO NPC aimed at creating conversations with NPCs that are unconstrained by predetermined dialogue trees. Similarly, Xbox signed a partnership with Inworld last year to equip developers with AI tools for character and game design.

While there are still questions around the near-term viability of AI NPCs, AI will transform all aspects of the gaming experience in the longer term. A future where every character has the depth and nuance of a real person opens up endless possibilities. It doesn’t take much imagination to envision what a game like Grand Theft Auto or Red Dead Redemption could be with a world full of AI NPCs.

In the rapidly evolving world of gaming, one truth remains: The best games depend on captivating storytelling, and there are no great stories without great characters. AI allows us to turn NPCs into compelling core features of games, who can not only drive the story forward, but transform the ways players experience and connect with games.

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