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The Artificial Intelligence (AI) in Games Market size is anticipated to experience substantial growth, projected at a Compound Annual Growth Rate CAGR of 24.65 % from 2023 to 2028, with an estimated market size to increase by USD 4.50 billion. This market is structured in a fragmented manner, exhibiting a Year-over-Year (YoY) growth of 22.96% in 2023-2024. In the regional breakdown, this analysis includes North America, APAC, Europe, South America, and Middle East and Africa, with North America contributing significantly, standing at 44%. Key countries propelling this market include the US, China, South Korea, Taiwan, and Japan.
AI in gaming pertains to responsive and adaptive video game environments. NPCs, or non-player characters, are typically the source of these AI-powered interactive experiences. They act intelligently or imaginatively, much like human game players might. AI is the mechanism that determines how an NPC acts in the virtual environment. Apart from NPC, AI in games provides a better user experience and other features such as high-quality graphics and animations.The growth of the market depends on several factors including growing adoption of AR and VR games, increasing adoption of free-to-play models and diversifying gaming population.
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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, AI 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 games 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 artificial intelligence (AI) in games market growth. With the rising awareness of AR and VR gaming, the deployment of AI in games is likely to increase, which will drive the growth of the market during the forecast period.
Rising preference for realistic graphics and animations is an emerging trend shaping the market growth. 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 AI 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 AI 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 which has a positive impact on the AI in game market growth. Thus, the increasing application of AI for realistic graphics and animations will positively impact the market in focus 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 AI 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 artificial intelligence (AI) in games market growth. Overall, network latency remains a significant challenge for the global AI in games 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 the immersion and realism of games. 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 artificial intelligence (AI) in games 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 games 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. Artificial intelligence in games market in North America is expected to grow during the forecast period due to the increase in demand for AI-based games. 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 for AI in games is expected to increase in the region during the forecast period.
The AI in Games Market 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 report also includes key purchase criteria and drivers of price sensitivity to help companies evaluate and develop their growth strategies.
Global AI in Games Market 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 research 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 AI in games market report forecasts market growth by revenue at global, regional & country levels and provides an analysis of the latest trends and growth opportunities from 2018-2028.
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AI In Games Market Scope |
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Report Coverage |
Details |
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Page number |
170 |
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Base year |
2023 |
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Historic period |
2018-2022 |
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Forecast period |
2024-2028 |
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Growth momentum & CAGR |
Accelerate at a CAGR of 24.65% |
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Market Growth 2024-2028 |
USD 4.5 billion |
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Market structure |
Fragmented |
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YoY growth 2023-2024(%) |
22.96 |
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Regional analysis |
North America, APAC, Europe, South America, and Middle East and Africa |
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Performing market contribution |
North America at 44% |
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Key countries |
US, China, Japan, UK, and Germany |
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Competitive landscape |
Leading Companies, Market Positioning of Companies, Competitive Strategies, and Industry Risks |
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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 |
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Market dynamics |
Parent market analysis, 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. |
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Customization purview |
If our report has not included the data that you are looking for, you can reach out to our analysts and get segments customized. |
We can help! Our analysts can customize this market research report to meet your requirements.
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
Research Framework
Technavio presents a detailed picture of the market by way of study, synthesis, and summation of data from multiple sources. The analysts have presented the various facets of the market with a particular focus on identifying the key industry influencers. The data thus presented is comprehensive, reliable, and the result of extensive research, both primary and secondary.
INFORMATION SOURCES
Primary sources
Secondary sources
DATA ANALYSIS
Data Synthesis
Data Validation
REPORT WRITING
Qualitative
Quantitative
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