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The Artificial Intelligence (AI) in Games Market size is anticipated to grow by USD 4.50 billion at a CAGR (Compound Annual Growth Rate) of 24.65 % from 2023 to 2028. The expansion of the market is influenced by various elements. Primarily, the burgeoning acceptance of Augmented Reality (AR) and Virtual Reality (VR) technologies is driving market growth. These immersive technologies offer enhanced gaming experiences, attracting a larger player base. Additionally, the proliferation of free-to-play models is increasing accessibility and affordability, broadening the market reach. Furthermore, the diversifying gaming population, including millennials and Gen Z, who prefer digital and interactive experiences, is fueling the market's growth trajectory.
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The market is experiencing a transformative wave with innovations like HoloLens from Microsoft, coupled with advanced middleware systems like Euphoria. These technologies leverage powerful GPUs and CPUs to enhance 3D games, offering immersive experiences with image upscaling and environmental interaction. The increasing processing power allows for real-time AI processing, enabling features like multiplayer gaming, efficient matchmaking, and robust anti-cheat systems. Mobile games benefit from expertise in AI and the emerging 5G network, while cloud gaming and edge computing promise seamless experiences across platforms. Game development software plays a pivotal role in facilitating these advancements, providing tools and frameworks that empower developers to create and optimize games for various platforms. The integration of game development software with cutting-edge technologies fosters innovation in game design and enhances the overall gaming experience, driving the evolution of the market towards more immersive and interconnected gaming ecosystems.
The growing adoption of AR and VR games is notably driving the market growth. AR/VR gaming is the integration of gaming visual and audio content with a user's environment in real time. Virtual reality (VR) and augmented reality (AR) experiences are being improved through the usage of AI-generated content in many ways. Gaming is one of the most widely used uses of AI-generated content in VR and AR. In addition to creating dynamic game settings depending on player inputs, Artificial Intelligence algorithms are also capable of producing realistic 3D representations of gaming characters and environments which became an integral part of AI in game market expansions. Users may have more immersive and interesting gaming experiences as a result of this.
In addition, developers have started developing AR technologies for HoloLens, a product of Microsoft. For instance, in January 2022, Microsoft HoloLens 2 was launched in India, which includes sensors that enable head and eye tracking and is designed to allow users to interact with holograms which has a positive impact on market growth. With the rising awareness of AR and VR gaming, the deployment of Artificial Intelligence market in sports is likely to increase, which will drive the market growth and trends during the forecast period.
Rising preference for realistic graphics and animations is one of the emerging market trends. With the use of AI technologies such as machine learning and neural networks, game creators are now able to produce images and animations that are more realistic. AI-driven methods have been used to produce textures with greater quality and lighting effects with more accuracy. For example, ray tracing uses Artificial Intelligence algorithms to simulate the physical behavior of light, producing realistic reflections, shadows, and global illumination in games such as Cyberpunk 2077 and Battlefield V. More realistic and fluid animations for in-game characters can be produced by AI by analysis and learning from real-world motion data.
Moreover, game designers may produce realistic animations that dynamically adjust to different situations by training Artificial Intelligence models on enormous datasets of animal and human movement. For example, the middleware system Euphoria, which is used in games such as Grand Theft Auto V and Red Dead Redemption 2, uses AI to create physics-based character movements that react to in-game events instantly, thus enhancing the AI in game market growth. Additionally, the increasing application of Artificial Intelligence for realistic graphics and animations is also impacting the cloud gaming in sports market. Cloud gaming in sports leverages AI-driven graphics and animation technologies to deliver realistic simulations and interactive experiences to sports enthusiasts. These advancements are reshaping the gaming landscape by offering immersive sports gaming experiences accessible across different devices via cloud platforms. As AI continues to advance, its integration into cloud gaming in sports promises to drive innovation and expand the market during the forecast period.
Network latency in between games is a significant challenge hindering market growth. Network latency is one of the key challenges faced by global Artificial Intelligence in the games market. Network latency refers to the delay between the time a player performs an action in a game and the time the action is registered on the game server. This delay can lead to poor gameplay experiences, especially in online multiplayer games. Latency is influenced by several factors, including the quality of the player's internet connection, the distance between the player and the game server, and the overall network infrastructure.
In addition, latency can be affected by the number of players using the same network, as well as the load on the game server which can also restrict market growth. Overall, network latency remains a significant challenge for the market, which will restrict market growth during the forecast period.
The market share growth by the AI enabled platforms segment will be significant during the forecast period. An integrated collection of tools called an AI platform enables the creation, testing, implementation, and maintenance of deep learning and ML models. AI uses a variety of tools and approaches to enable machines to perform tasks that people cannot manually complete, such as data analysis, prediction, and action-taking, more quickly and accurately.
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The AI enabled platforms segment was the largest and was valued at USD 476.26 million in 2018. The capacity of AI to examine player behavior and data offers insights into player inclinations and preferences, enabling more customized and interesting experiences. At the forefront of this change are businesses such as Microsoft and Alphabet AI, whose platforms and tools driven by AI are reshaping the game production industry.
The AI enabled platform is also improving immersion and realism. Companies are transforming game images with AI powered graphics and ray tracing, producing lifelike scenes that were previously not possible. Real-time interactions between human gamers and AI-powered virtual characters are also made possible by AI enabled platforms. Thus, increasing deployment of AI enabled platforms in the gaming industry will drive the growth of the AI enabled platforms segment and market in focus during the forecast period.
Machine learning is revolutionizing nearly every sector of the economy, including healthcare and banking. Machine learning has also taken over the game business in recent times. In modern game creation, machine learning is evident at every step of the process. While also providing a distinctive user experience for users, machine learning can help game developers save time and effort. The creation of NPC algorithms that make these made-up enemies seem as real as feasible is greatly aided by machine learning technologies which also results in market expansion. These non-player characters are created using models that are trained to mimic human behavior, action, and playing styles with the help of machine learning. Thus, such applications of machine learning in AI will drive the growth of the segment and market during the forecast period.
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North America is estimated to contribute 44% to the growth of the global market during the forecast period. Technavio’s analysts have elaborately explained the regional trends and drivers that shape the market during the forecast period. The market in North America is expected to grow during the forecast period due to the increase in demand. With the growing popularity of esports, a large number of gamers in the region are competing in various esports, such as the international DOTA 2 championship. Gaming is becoming a professional career option in countries such as the US. Various game developers and game publishing enterprises are investing in the development of multiplayer games due to the growing demand for esports in the region.
In addition, artificial intelligence in the games market in North America is also driven by the increasing number of uploads and downloads of games on a daily basis. The increase in popularity of mobile gaming in North America will encourage game developers and game publishing enterprises to develop and launch new AI-based games to cater to the growing demand. Hence, the demand is expected to increase in the region during the forecast period.
The market forecasting report includes the adoption lifecycle of the market, covering from the innovator’s stage to the laggard’s stage. It focuses on adoption rates in different regions based on penetration. Furthermore, the market growth and forecasting report also includes key purchase criteria and drivers of price sensitivity to help companies evaluate and develop their growth strategies.
Customer Landscape
Companies are implementing various strategies, such as strategic alliances, partnerships, mergers and acquisitions, geographical expansion, and product/service launches, to enhance their presence in the market.
Alphabet Inc. - The company offers AI in games solution through Google DeepMind.
Electronic Arts Inc. - The company offers AI in games solutions for dynamic and adaptive games.
Latitude - The company offers AI in games solution through AI Dungeon.
The market research and growth report also includes detailed analyses of the competitive landscape of the market and information about 20 market companies, including:
Qualitative and quantitative analysis of companies has been conducted to help clients understand the wider business environment as well as the strengths and weaknesses of key market players. Data is qualitatively analyzed to categorize companies as pure play, category-focused, industry-focused, and diversified; it is quantitatively analyzed to categorize companies as dominant, leading, strong, tentative, and weak.
The market research report provides comprehensive data (region wise segment analysis), with forecasts and estimates in "USD Billion" for the period 2024 to 2028, as well as historical data from 2018 to 2022 for the following segments
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The market integrates advanced algorithms to enhance player experience. NPCs, sidekicks, and allies driven by sophisticated AI algorithms enrich the game world, engaging human users in dynamic conversations and interactions. Pathfinding algorithms optimize navigation through diverse terrain and dynamic elements, ensuring replayability and challenging gameplay. In-game voice assistants provide real-time guidance and tips, augmenting the player's experience in complex games. As AI continues to evolve, the AI games market promises innovative solutions, creating immersive gaming experiences that captivate players and push the boundaries of interactive entertainment.
The integration of realistic physics simulations and AI-driven animation techniques elevates gaming realism, attracting gamers worldwide. Market growth factors include the expansion of cloud-based services, the rise of smart gaming consoles, and platforms like Voyage, Pixel This, Things, Loom, and Mediaeval Problems catering to diverse gaming preferences. The market is poised for significant growth as technology continues to evolve, offering unparalleled gaming experiences and driving innovation in the gaming industry.
Market Scope |
|
Market Report Coverage |
Details |
Page number |
170 |
Base year |
2023 |
Historic period |
2018-2022 |
Forecast period |
2024-2028 |
Growth momentum & CAGR |
Accelerate at a CAGR of 24.65% |
Market Growth 2024-2028 |
USD 4.5 billion |
Market structure |
Fragmented |
YoY growth 2023-2024(%) |
22.96 |
Regional analysis |
North America, APAC, Europe, South America, and Middle East and Africa |
Performing market contribution |
North America at 44% |
Key countries |
US, China, Japan, UK, and Germany |
Competitive landscape |
Leading Companies, Market Positioning of Companies, Competitive Strategies, and Industry Risks |
Key companies profiled |
Alphabet Inc., Capcom Co. Ltd., Charisma Entertainment Ltd., COGNOSPHERE PTE. LTD., Electronic Arts Inc., Konami Group Corp., Latitude, Microsoft Corp., NetEase Inc., Nintendo Co. Ltd., NVIDIA Corp., PrometheanAI Inc., Side Effects Software Inc., Sony Group Corp., Take Two Interactive Software Inc., Tencent Holdings Ltd., Theai Inc., Ubisoft Entertainment SA, Unity Software Inc., and Vivendi SE |
Market dynamics |
Parent market analysis, market forecast, market analysis and report, Market growth inducers and obstacles, Fast-growing and slow-growing segment analysis, COVID-19 impact and recovery analysis and future consumer dynamics, Market condition analysis for the forecast period. |
Customization purview |
If our market trends and analysis report has not included the data that you are looking for, you can reach out to our analysts and get segments customized. |
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1 Executive Summary
2 Market Landscape
3 Market Sizing
4 Historic Market Size
5 Five Forces Analysis
6 Market Segmentation by Type
7 Market Segmentation by Technology
8 Customer Landscape
9 Geographic Landscape
10 Drivers, Challenges, and Trends
11 Vendor Landscape
12 Vendor Analysis
13 Appendix
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