AI in Video Games Market Set to Expand with 26.8% CAGR, Reaching $11.4 Billion by 2032

AI in Video Games Market

A recent report by Allied Market Research, titled “AI in Video Games Market,” highlights that the market for AI in video games was valued at $1.1 billion in 2022. It is projected to grow at a compound annual growth rate (CAGR) of 26.8% from 2023 to 2032, reaching an estimated value of $11.4 billion by 2032. The growth of the global artificial intelligence in video games market can be attributed to various factors such as increasing demand for AI-enabled devices, rising adoption of cloud-based services, and growing demand for smart gaming consoles.

AI in gaming refers to artificial intelligence powering responsive and adaptive behavior within video games. A common example is for AI to control non-player characters (NPCs), which are often sidekicks, allies or enemies of human users that tweak their behavior to appropriately respond to human players’ actions.

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By learning from interactions and changing their behavior, NPCs increase the variety of conversations and actions that human gamers encounter. AI is responsible for determining the optimal path for NPCs to navigate through the game world. Pathfinding algorithms calculate the most efficient route from one point to another while accounting for obstacles, terrain, and other dynamic elements. This ensures that NPCs move realistically and follow the game’s level design. Further, AI can adapt to changing circumstances in the game.

For instance, if a player repeatedly uses a particular strategy, the AI may learn to counter it. This adaptability enhances the challenge and replay ability of the game. Further, AI-powered in-game voice assistants are providing players with real-time guidance, tips, and information, enhancing the player’s experience and helping them navigate complex games more effectively. Therefore, these trends are drving the growth of artificial intelligence in video games market.

Furthermore, major market players have undertaken various strategies to increase the competition and offer enhanced services to their customers. For instance, in May 2023, Google launched PaLM 2, a next generation language model. A general-purpose AI model called PaLM 2 can be used to power chatbots in the ChatGPT manner, as well as to create code, translate across languages, analyze and react to photos.

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Combining those abilities would allow a user to ask a question about a restaurant in Bulgaria in English, and the system would be able to search the web for Bulgarian responses, find an answer, translate the answer into English, add a picture of the location, and then follow up with a code snippet to create a database entry for the place. Moreover, in March 2023, F5 Side FX collaborated with Apple Inc. and launched Houdini Apple Silicon to coincide with H19.5.534 production build. The Houdini Apple Silicon build is built natively for macOS arm64 so Mac users can take full advantage of the power of Apple silicon M1 and M2 chips. Such strategies are driving the growth of AI in video games industry.

In 2022, the action genre dominated the global AI in video games market, contributing nearly one-third of the total revenue, and is expected to retain its leading position throughout the forecast period. This dominance is attributed to AI systems assessing player skill levels and dynamically adjusting game difficulty, ensuring an engaging experience for casual and Intense gamers. Meanwhile, the role-playing segment is anticipated to achieve the highest CAGR of 32.0% from 2023 to 2032. This growth is driven by AI-powered in-game economies that simulate supply and demand, influencing item prices and availability. These features enhance the depth of economic systems, encouraging players to participate in trading and crafting activities.

The hardware segment attained the highest AI market size in video games in 2022 based on components. This is attributed to gamers’ increasing search for immersive experiences, and AI-powered hardware features contribute to achieving higher levels of realism and immersion.

Region-wise, Asia-Pacific is expected to be the fastest growing region during the forecast period owing to increasing investments by companies and governments for the implementation of advanced technologies such as artificial intelligence (AI) and robotics. Moreover, rise in disposable income levels is also expected to drive Ai in video games market forecast.

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The pandemic highlighted the importance of AI in gaming industry, leading to increased investment in AI research and development. Game studios and tech companies directed resources toward advancing AI technologies for gaming. Moreover, as more players spent time playing games during lockdowns, AI-powered features such as personalized content recommendations, dynamic difficulty adjustment, and adaptive gameplay became essential for keeping players engaged and immersed in games. In addition, with the increased player base, data analytics powered by AI became crucial. Game publishers and developers leveraged AI to analyze player behavior, preferences, and spending habits, enabling data-driven decision-making for content updates, in-game monetization, and marketing strategies. Therefore, COVID-19 had a positive impact on the artificial intelligence in video games market.

Key findings of the study

1. By component, the hardware segment led the AI in video games market in terms of revenue in 2022.

2. By technology, the machine learning segment led the AI in video games market in terms of revenue in 2022.

3. By genre, the action segment led the AI in video games market share in terms of revenue in 2022.

4. By region, North America generated the highest revenue in 2022.

The key players profiled in the AI in video games market analysis are Ubisoft, Google DeepMind, Inworld AI, NVIDIA Corporation, Unity Technologies, Latitude.io, Electronic Arts Inc., PrometheanAI Inc., Rockstar Games, and SideFX.

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The report provides a detailed analysis of the key players in the global AI in video games market. These players have adopted different strategies, such as partnership, product launch, and expansion, to increase their market share and maintain dominant shares in different regions. The report is valuable in highlighting business performance, operating segments, product portfolio, and strategic moves of market players to showcase the competitive scenario.

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