AI reshapes games from mashups to watermarks, while studios reshuffle

Martin Klima, co-founder of Kingdom Come: Deliverance developer Warhorse, told PC Gamer that executives treat AI as a 'get out of jail free card' on the basis of a 'simplified mental model'. He calls the idea of laying off half a team and replacing them with AI 'fundamentally flawed'. His forecast is that player demand for ever larger games will keep human teams at their current size, with AI used to expand scope, such as more branching classes or more missions, rather than to cut costs. In his words, AI may not make a game cheaper but will let studios build bigger games for the same money.

He concedes AI may become hard to avoid if cost-cutting stays a priority, and the piece cites Take-Two's Strauss Zelnick saying AI does not make hits because clones don't sell, though it can help developers. Author Elie Gould frames this against AI's role in voice acting and in the industry's layoffs, and lands on Klima's side: the game that offers more will be better.

CounterpointExecutives who see AI as a headcount lever would disagree, and so might developers who fear that 'bigger games for the same cost' simply raises output expectations without hiring anyone. Klima's prediction also depends on players rewarding scale, which is not guaranteed.

Previously: The Banjo: Recompiled developer argued genAI offers no real speedup for quality recompilations and urged against promoting AI-generated ports. — Tuesday October 6 edition.

Aftermath's Nathan Grayson untangles who was responsible after fans spotted a Gemini watermark on the album art for 'Meow', a song by Ironmouse, Sleeping Forest and HalaCG that was added to Fortnite last month. Ironmouse, who cancelled a sponsored stream of Neverness To Everness in June over AI concerns, said she had no idea and that her team demanded a change. Epic told Dexerto the artwork came from the artist and was the same as on all other demand-side platforms, and that it swapped it once the art was changed. Logo designer Detetiive said they only made the Club Ironmouse logo, using Procreate and Illustrator.

The party left holding it is Trap Nation, the music promoter that distributed the track. It said the art was not meant to be final and that Ironmouse did not know AI had been used. Grayson argues Epic still should have caught it, notes that no individual has been identified, and concludes that the whole mess came from an embellishment that could easily have been drawn by hand, so the lesson is to just not use AI.

CounterpointEpic and AI-friendly distributors would argue this was a review failure, not an AI failure, since the tool was not the cause of the miscommunication. Some fans who accused Ironmouse of hypocrisy over working with Epic will see the episode as confirming their point rather than clearing her.

Previously: The Banjo: Recompiled developer argued genAI offers no real speedup for quality recompilations and urged against promoting AI-generated ports. — Tuesday October 6 edition.

Polygon's Patricia Hernandez says an AI-driven upheaval is under way. Over the past week or so, projects have appeared that fuse unrelated games, such as Super Mario 64 inside Elden Ring and Minecraft inside Pokémon. She attributes them to Claude Opus 5.5, released Sept. 22, which can reverse-engineer how games work in minutes, along with third-party tools like the Universal Modder. The same capability is credited with advances in PS5 emulators SharpEmu and KytyPS5, which run PS5 games at native 4K on PC, and games like Demon's Souls that previously could not reach character creation now get fixes generated with Claude.

She also points to Relapse, a human-written PS5 jailbreak that gives kernel access from the console's own interface on older firmware recent enough to cover most of this year's major releases. Jailbroken hardware lets vibe coders distribute emulators and recompilations, and one example is Super Mario ported to PS5 in files nearly 50% smaller than the official ones. Hernandez concedes that many projects are unstable or not publicly playable, but argues DMCA takedowns can only go so far and that the law has not caught up, which should worry executives.

CounterpointHernandez's own caveats point to the skeptical view: many of these builds are glitchy demos, and emulation and modding have long outpaced publishers without ending the business. Others, like the Banjo: Recompiled developer covered earlier, argue AI contributes little to quality recompilations and that the credit belongs to human-built tooling.

Previously: The Banjo: Recompiled developer argued genAI offers no real speedup for quality recompilations and urged against promoting AI-generated ports. — Tuesday October 6 edition.

Shawn Layden, former president and CEO of Sony Interactive Entertainment, told The Expansion Pass podcast that ending disc production for new PS5 games in January 2028 risks 'a whole lot of brand hit and reputation bite'. He says he has not seen Sony's financials and accepts that most players like digital downloads, putting the split at maybe 80% digital and 20% not. But he calls that 20% the most faithful of the faithful, the collectors who buy two copies of every game, and says he doesn't agree with the decision.

His sharper point is ownership. 'If you can't sell a thing, that means you don't own a thing,' he says, and buying access sounds less appealing, with consumers prone to imagining the worst case. Sony announced the change in July, with communications director Sid Shuman citing a preference for digital, and CFO Lin Tao told investors that a large part of content sales is already digital and she sees no negative impact on the business.

CounterpointSony's own position, per Shuman and Lin Tao, is that digital already dominates and the move will not hurt sales. Layden concedes he has no visibility into the cost savings and sales data behind the decision, and retail and download figures would be the way to test his brand-damage claim.

Philip Holt, head of State of Decay 3 developer Undead Labs, told The Game Business that the studio chose independence after Xbox's July divestment plan, which had originally promised 'new ownership'. He says nothing went wrong and that the studio had interest from a number of suitors, but because it didn't need an 'insurmountable amount' of money to finish the game, he proposed a management buyout. The studio is now owned by Full Measure, a company formed by Holt with several employees as stakeholders, and stock options are being issued to all staff. This follows the model of Double Fine and Compulsion Games.

Holt says he was surprised the studio was included given how far along the game is, and that it is 'pretty close to finishing', still in alpha with a closed beta planned by the end of 2026. He admits a 'significant' number of staff were laid off, but declines to give numbers and says scope won't be cut. The new publisher, whom he doesn't name, is described as a 'fantastic partner'.

CounterpointLaid-off staff and sceptical observers might see 'small and lean' and an undisclosed headcount as a sign the studio is more fragile than Holt's 'absolutely' suggests. Holt's account is also the only source here, and the unnamed publisher can't be checked.

Previously: Ninja Theory has begun layoffs after two sale agreements failed, with a closure consultation under way and Arkane's fate still unresolved. — Tuesday October 6 edition.

In an interview with Automaton, covered by Rock Paper Shotgun's Ashley Schofield, Sonic series general producer Takashi Iizuka said Sonic Team is not planning remakes or remasters, because they provide 'essentially the same experience again'. He says fans regularly ask for ports such as Sonic Unleashed, but that remaking an old game now takes about as many resources as making a new one, since graphics must be rebuilt and old gameplay reads as rough by modern standards. He did acknowledge concerns about older titles being unplayable and asked fans to 'wait a little longer'.

Schofield welcomes the stance, arguing remakes trade on nostalgia and that Sonic Adventure 2 or Sonic Heroes don't need one, while hoping the hint means PC ports of console-locked games such as Shadow the Hedgehog.

CounterpointPublishers still treat remakes as near-guaranteed earners, and fans who ask Sega for them would disagree. Capcom is the clearest example, since its remake line is being expanded and tied to its numbered games.

Previously: Takeuchi said Resident Evil remakes will eventually catch up with the numbered games and a crossover is being prepared. — Monday October 5 edition.