Can AI Make Video Games More Immersive? Some Studios Turn to AI-Fueled NPCs for More Interaction

The AI (Artificial Intelligence) letters and robot hand are placed on computer motherboard in this illustration taken, June 23, 2023. (Reuters)
The AI (Artificial Intelligence) letters and robot hand are placed on computer motherboard in this illustration taken, June 23, 2023. (Reuters)
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Can AI Make Video Games More Immersive? Some Studios Turn to AI-Fueled NPCs for More Interaction

The AI (Artificial Intelligence) letters and robot hand are placed on computer motherboard in this illustration taken, June 23, 2023. (Reuters)
The AI (Artificial Intelligence) letters and robot hand are placed on computer motherboard in this illustration taken, June 23, 2023. (Reuters)

For decades, video games have relied on scripted, stilted interactions with non-player characters to help shepherd gamers in their journeys. But as artificial intelligence technology improves, game studios are experimenting with generative AI to help build environments, assist game writers in crafting NPC dialogue and lend video games the improvisational spontaneity once reserved for table-top role-playing games.

In the multiplayer game “Retail Mage,” players help run a magical furniture store and assist customers in hopes of earning a five-star review. As a salesperson — and wizard — they can pick up and examine items or tell the system what they'd like to do with a product, such as deconstruct chairs for parts or tear a page from a book to write a note to a shopper.

A player’s interactions with the shop and NPCs around them — from gameplay mechanics to content and dialogue creation — are fueled by AI rather than a predetermined script to create more options for chatting and using objects in the shop.

“We believe generative AI can unlock a new kind of gameplay where the world is more responsive and more able to meet players at their creativity and the things that they come up with and the stories they want to tell inside a fantasy setting that we create for them,” said Michael Yichao, cofounder of Jam & Tea Studios, which created “Retail Mage.”

The typical NPC experience often leaves something to be desired. Pre-scripted interactions with someone meant to pass along a quest typically come with a handful of chatting options that lead to the same conclusion: players get the information they need and continue on. Game developers and AI companies say that by using generative AI tech, they aim to create a richer experience that allows for more nuanced relationships with the people and worlds that designers build.

Generative AI could also provide more opportunities for players to go off-script and create their own stories if designers can craft environments that feel more alive and can react to players' choices in real-time.

Tech companies continue to develop AI for games, even as developers debate how, and whether, they’ll use AI in their products. Nvidia created its ACE technologies to bring so-called “digital humans” to life with generative AI. Inworld AI provides developers with a platform for generative NPC behavior and dialogue. Gaming company Ubisoft said last year that it uses Ghostwriter, an in-house AI tool, to help write some NPC dialogue without replacing the video game writer.

A report released by the Game Developers Conference in January found that nearly half of developers surveyed said generative AI tools are currently being used in their workplace, with 31% saying they personally use those tools. Developers at indie studios were most likely to use generative AI, with 37% reporting using the tech.

Still, roughly four out of five developers said they worry about the ethical use of AI. Carl Kwoh, Jam & Tea's CEO, said AI should be used responsibly alongside creators to elevate stories — not to replace them.

“That’s always been the goal: How can we use this tool to create an experience that makes players more connected to each other?” said Kwoh, who is also one of the company’s founders. “They can tell stories that they couldn’t tell before.”

Using AI to provide NPCs with endless things to say is “definitely a perk,” Yichao said, but "content without meaning is just endless noise." That's why Jam & Tea uses AI — through Google's Gemma 2 and their own servers in Amazon — to give NPCs the ability to do more than respond, he said. They can look for objects as they’re shopping or respond to other NPCs to add “more life and reactivity than a typically scripted encounter.”

“I’ve watched players turn our shopping experience into a bit of a dating sim as they flirt with customers and then NPCs come up with very realistic responses,” he said. “It’s been really fun to see the game react dynamically to what players bring to the table.”

Demonstrating a conversation with an NPC in the game “Mecha BREAK,” in which players battle war machines, Ike Nnole said that Nvidia has made its AI “humans” respond faster than they previously could by using small language models. Using Nvidia's AI, players can interact with the mechanic, Martel, by asking her to do things like customize the color of a mech machine.

“Typically, a gamer would go through menus to do all this,” Nnole, a senior product marketing manager at Nvidia said. “Now it could be a much more interactive, much quicker experience.”

Artificial Agency, a Canadian AI company, built an engine that allows developers to bring AI into any part of their game — not only NPCs, but also companions and “overseer agents” that can steer a player towards content they’re missing. The AI can also create tutorials to teach players a skill that they are missing so they can have more fun in-game, the company said.

“One way we like to put it is putting a game designer on the shoulder of everyone as they’re playing the game,” said Alex Kearney, cofounder of Artificial Agency. The company’s AI engine can be integrated at any stage of the game development cycle, she said.

Brian Tanner, Artificial Agency's CEO, said scripting every possible outcome of a game can be tedious and difficult to test. Their system allows designers to act more like directors, he said, by telling characters more about their motivation and background.

"These characters can improvise on the spot depending on what’s actually happening in the game,” Tanner said.

It's easy to run into a game's guardrails, Tanner said, where NPCs keep repeating the same phrase regardless of how players interact with them. But as AI continues to evolve, that will change, he added.

“It is truly going to feel like the world’s alive and like everything really reacts to exactly what’s happening," he said. “That’s going to add tremendous realism.”



Nvidia, Joining Big Tech Deal Spree, to License Groq Technology, Hire Executives

The Nvidia logo is seen on a graphic card package in this illustration created on August 19, 2025. (Reuters)
The Nvidia logo is seen on a graphic card package in this illustration created on August 19, 2025. (Reuters)
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Nvidia, Joining Big Tech Deal Spree, to License Groq Technology, Hire Executives

The Nvidia logo is seen on a graphic card package in this illustration created on August 19, 2025. (Reuters)
The Nvidia logo is seen on a graphic card package in this illustration created on August 19, 2025. (Reuters)

Nvidia has agreed to license chip technology from startup Groq and hire away its CEO, a veteran of Alphabet's Google, Groq said in a blog post on Wednesday.

The deal follows a familiar pattern in recent years where the world's biggest technology firms pay large sums in deals with promising startups to take their technology and talent but stop short of formally acquiring the target.

Groq specializes in what is known as inference, where artificial intelligence models that have already been trained respond to requests from users. While Nvidia dominates the market for training AI models, it faces much more competition in inference, where traditional rivals such as Advanced Micro Devices have aimed ‌to challenge it ‌as well as startups such as Groq and Cerebras Systems.

Nvidia ‌has ⁠agreed to a "non-exclusive" ‌license to Groq's technology, Groq said. It said its founder Jonathan Ross, who helped Google start its AI chip program, as well as Groq President Sunny Madra and other members of its engineering team, will join Nvidia.

A person close to Nvidia confirmed the licensing agreement.

Groq did not disclose financial details of the deal. CNBC reported that Nvidia had agreed to acquire Groq for $20 billion in cash, but neither Nvidia nor Groq commented on the report. Groq said in its blog post that it will continue to ⁠operate as an independent company with Simon Edwards as CEO and that its cloud business will continue operating.

In similar recent deals, Microsoft's ‌top AI executive came through a $650 million deal with a startup ‍that was billed as a licensing fee, and ‍Meta spent $15 billion to hire Scale AI's CEO without acquiring the entire firm. Amazon hired ‍away founders from Adept AI, and Nvidia did a similar deal this year. The deals have faced scrutiny by regulators, though none has yet been unwound.

"Antitrust would seem to be the primary risk here, though structuring the deal as a non-exclusive license may keep the fiction of competition alive (even as Groq’s leadership and, we would presume, technical talent move over to Nvidia)," Bernstein analyst Stacy Rasgon wrote in a note to clients on Wednesday after Groq's announcement. And Nvidia CEO Jensen Huang's "relationship with ⁠the Trump administration appears among the strongest of the key US tech companies."

Groq more than doubled its valuation to $6.9 billion from $2.8 billion in August last year, following a $750 million funding round in September.

Groq is one of a number of upstarts that do not use external high-bandwidth memory chips, freeing them from the memory crunch affecting the global chip industry. The approach, which uses a form of on-chip memory called SRAM, helps speed up interactions with chatbots and other AI models but also limits the size of the model that can be served.

Groq's primary rival in the approach is Cerebras Systems, which Reuters this month reported plans to go public as soon as next year. Groq and Cerebras have signed large deals in the Middle East.

Nvidia's Huang spent much of his biggest keynote speech of 2025 arguing that ‌Nvidia would be able to maintain its lead as AI markets shift from training to inference.


Italy Watchdog Orders Meta to Halt WhatsApp Terms Barring Rival AI Chatbots

The logo of Meta is seen at Porte de Versailles exhibition center in Paris, France, June 11, 2025. (Reuters)
The logo of Meta is seen at Porte de Versailles exhibition center in Paris, France, June 11, 2025. (Reuters)
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Italy Watchdog Orders Meta to Halt WhatsApp Terms Barring Rival AI Chatbots

The logo of Meta is seen at Porte de Versailles exhibition center in Paris, France, June 11, 2025. (Reuters)
The logo of Meta is seen at Porte de Versailles exhibition center in Paris, France, June 11, 2025. (Reuters)

Italy's antitrust authority (AGCM) on Wednesday ordered Meta Platforms to suspend contractual terms ​that could shut rival AI chatbots out of WhatsApp, as it investigates the US tech group for suspected abuse of a dominant position.

A spokesperson for Meta called the decision "fundamentally flawed," and said the emergence of AI chatbots "put a strain on our systems that ‌they were ‌not designed to support".

"We ‌will ⁠appeal," ​the ‌spokesperson added.

The move is the latest in a string by European regulators against Big Tech firms, as the EU seeks to balance support for the sector with efforts to curb its expanding influence.

Meta's conduct appeared capable of restricting "output, market ⁠access or technical development in the AI chatbot services market", ‌potentially harming consumers, AGCM ‍said.

In July, the ‍Italian regulator opened the investigation into Meta over ‍the suspected abuse of a dominant position related to WhatsApp. It widened the probe in November to cover updated terms for the messaging app's business ​platform.

"These contractual conditions completely exclude Meta AI's competitors in the AI chatbot services ⁠market from the WhatsApp platform," the watchdog said.

EU antitrust regulators launched a parallel investigation into Meta last month over the same allegations.

Europe's tough stance - a marked contrast to more lenient US regulation - has sparked industry pushback, particularly by US tech titans, and led to criticism from the administration of US President Donald Trump.

The Italian watchdog said it was coordinating with the European ‌Commission to ensure Meta's conduct was addressed "in the most effective manner".


Amazon Says Blocked 1,800 North Koreans from Applying for Jobs

Amazon logo (Reuters)
Amazon logo (Reuters)
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Amazon Says Blocked 1,800 North Koreans from Applying for Jobs

Amazon logo (Reuters)
Amazon logo (Reuters)

US tech giant Amazon said it has blocked over 1,800 North Koreans from joining the company, as Pyongyang sends large numbers of IT workers overseas to earn and launder funds.

In a post on LinkedIn, Amazon's Chief Security Officer Stephen Schmidt said last week that North Korean workers had been "attempting to secure remote IT jobs with companies worldwide, particularly in the US".

He said the firm had seen nearly a one-third rise in applications by North Koreans in the past year, reported AFP.

The North Koreans typically use "laptop farms" -- a computer in the United States operated remotely from outside the country, he said.

He warned the problem wasn't specific to Amazon and "is likely happening at scale across the industry".

Tell-tale signs of North Korean workers, Schmidt said, included wrongly formatted phone numbers and dodgy academic credentials.

In July, a woman in Arizona was sentenced to more than eight years in prison for running a laptop farm helping North Korean IT workers secure remote jobs at more than 300 US companies.

The scheme generated more than $17 million in revenue for her and North Korea, officials said.

Last year, Seoul's intelligence agency warned that North Korean operatives had used LinkedIn to pose as recruiters and approach South Koreans working at defense firms to obtain information on their technologies.

"North Korea is actively training cyber personnel and infiltrating key locations worldwide," Hong Min, an analyst at the Korea Institute for National Unification, told AFP.

"Given Amazon's business nature, the motive seems largely economic, with a high likelihood that the operation was planned to steal financial assets," he added.

North Korea's cyber-warfare program dates back to at least the mid-1990s.

It has since grown into a 6,000-strong cyber unit known as Bureau 121, which operates from several countries, according to a 2020 US military report.

In November, Washington announced sanctions on eight individuals accused of being "state-sponsored hackers", whose illicit operations were conducted "to fund the regime's nuclear weapons program" by stealing and laundering money.

The US Department of the Treasury has accused North Korea-affiliated cybercriminals of stealing over $3 billion over the past three years, primarily in cryptocurrency.