Veteran games executive and former Nexon CEO, Owen Mahoney, believes the video game industry is on the cusp of a massive transformation--and that AI is at the center of it. He argues that AI is already integrated into many aspects of game development, from asset production to testing tools, and that its impact will only intensify.
In an interview with The Game Business, Mahoney explains that the AAA sector is facing what he bluntly calls an "end-of-days" moment. Costs are skyrocketing, development cycles are slowing, and publishers are becoming increasingly risk-averse, adding that the industry often misunderstands where value truly comes from.
Responding to examples of failed studios with prestigious founders, Mahoney says, "The examples that you just gave were, 'We bought this company because five years ago they made some game. So, therefore they're good.' It doesn’t work that way at all," and insists that the "game companies are really just collections of people." He believes that success depends on understanding their motivation and creative drive, not past hits.
Mahoney contrasts Embark's success with the broader structural problems holding AAA development back. He describes the impossible situation faced by public-company CEOs.
"You're running a $23 billion company. And you have to make a decision, in a very short period of time, to greenlight a project ... if that new project doesn't do well, you're going to be explaining to your board why you burnt $300 million in company cash," he said.
He continues that one failure is survivable, but "if you do it again, they're going to be calling openly for your head, and by the third time you'll have an activist investor." Mahoney thinks this kind of pressure makes executives fund only familiar ideas, worsening the cycle. "The AAA industry is structurally at its end," he adds.
Despite this bleak diagnosis, Mahoney is optimistic about what AI could unlock. He acknowledges that AI has "an unbelievable ability to create a lot of slop, but so does Photoshop." He even argues that audiences will continue "rejecting slop and bad product and only demanding good product."
More importantly, he sees AI as a force that will empower smaller teams, shorten development timelines, and introduce entirely new forms of play, just as the internet once did. "I continue to believe that the industry will probably triple in the next five to seven years. Just like every major wave [of technology] has had a major positive impact on the video games industry. The nature of the medium itself is changing, and that’s very, very good for us."
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In an interview with The Game Business, Mahoney explains that the AAA sector is facing what he bluntly calls an "end-of-days" moment. Costs are skyrocketing, development cycles are slowing, and publishers are becoming increasingly risk-averse, adding that the industry often misunderstands where value truly comes from.
Responding to examples of failed studios with prestigious founders, Mahoney says, "The examples that you just gave were, 'We bought this company because five years ago they made some game. So, therefore they're good.' It doesn’t work that way at all," and insists that the "game companies are really just collections of people." He believes that success depends on understanding their motivation and creative drive, not past hits.
Mahoney contrasts Embark's success with the broader structural problems holding AAA development back. He describes the impossible situation faced by public-company CEOs.
"You're running a $23 billion company. And you have to make a decision, in a very short period of time, to greenlight a project ... if that new project doesn't do well, you're going to be explaining to your board why you burnt $300 million in company cash," he said.
He continues that one failure is survivable, but "if you do it again, they're going to be calling openly for your head, and by the third time you'll have an activist investor." Mahoney thinks this kind of pressure makes executives fund only familiar ideas, worsening the cycle. "The AAA industry is structurally at its end," he adds.
Despite this bleak diagnosis, Mahoney is optimistic about what AI could unlock. He acknowledges that AI has "an unbelievable ability to create a lot of slop, but so does Photoshop." He even argues that audiences will continue "rejecting slop and bad product and only demanding good product."
More importantly, he sees AI as a force that will empower smaller teams, shorten development timelines, and introduce entirely new forms of play, just as the internet once did. "I continue to believe that the industry will probably triple in the next five to seven years. Just like every major wave [of technology] has had a major positive impact on the video games industry. The nature of the medium itself is changing, and that’s very, very good for us."
Source