Tommy Thompson, head of AI and Games spoke to a room packed full of game industry professionals about trends to watch in AI for 2026 at Game Republic Trends and Opportunities event hosted at Manchester Metropolitan University on 28th January.
The event formed part of Game Republic’s events and activities for 2026 supported by Official Partners Red Kite Games, Xsolla and Double Eleven.
Dr. Tommy Thompson began his presentation by emphatically stating that we are in a bubble. Big tech is pushing AI as an essential technology that will fundamentally change our lives…even though that has not happened. He cited that the Magnificent 7 had over $560B in capital expenditure across 2024 and 2025 on AI for only $35B revenue, and Nvidia is the only company really making any profit, because they make the chips used in this technology.
Managing AI
“what we’re actually seeing is maybe if you don’t replace people with AI and instead find ways to use AI to address very specific pain points in their production processes, lo and behold this s— is useful.”
Despite abysmal returns overall, Dr. Thompson shared that some people are managing to use AI effectively, stating “what we’re actually seeing is maybe if you don’t replace people with AI and instead find ways to use AI to address very specific pain points in their production processes, lo and behold this s— is useful.”
An example of this that Dr. Thompson shared with the audience was AgentMerge. Developed between Dice and EA Seed, AgentMerge was a dashboard for producers that reviewed all the newly created Jira tickets and identified tickets caused by the same issue, which enhanced their ability to leverage the Pareto Principle to target issues creating the most problems.
Generative AI Impact on Indie Game Discovery
“what we’re not seeing is anything being done here that is really supporting and elevating an existing designer’s vision to do something potentially that the technology could enable that we couldn’t do before.”
Dr. Thompson also predicted that Generative AI will make game discovery harder for Indies, pointing to statistics from SteamDB showing that there was a massive increase in the number of games that disclosed they included AI content in their finished product between 2023 (134 games) and 2025 (4,307 games). To compound this issue is the fact that the majority of these games are low-effort projects, akin to ‘asset flips’ of the early 2010s.
As the number of such games increases, Dr. Thompson informed us that we should expect to hear the terms AI Native games—“games that rely on Generative AI to work”—and AI First studios, which are studios that “[use] generative tools as a core part of what they do”. While AI Native games have already come to market, there are now clear sales successes to be found.
AI and Consumer Backlash
The result of this increase in AI Native games and Generative AI content in games has been consumer backlash. Dr. Thompson gave two noteworthy reasons for why we are seeing this backlash. The first reason he gave was that AI has not proven its worth in the game industry, saying “what we’re not seeing is anything being done here that is really supporting and elevating an existing designer’s vision to do something potentially that the technology could enable that we couldn’t do before.” The second reason Dr. Thompson gave was the “player’s perception of a perceived degradation of quality”, especially in light of price increases on games across the industry. On the developer side, indie developers are now starting to release games with very obvious disclaimers stating ‘No Generative AI was used in this game’, and it is fast becoming a badge of honour for some and a strategy for developers looking to establish an audience.
On-device AI
On-device AI will see a big push in 2026. The reason for this push, Dr. Thompson explained, is to minimize latency for Generative AI applications and Large Language Models. To accomplish the transition from cloud-based to on-device will require dedicated computing power which some devices, like the Switch 2, already have, and others, like the Playstation and Xbox, have announced is coming in future hardware releases.
AI is also causing turbulence in the hardware manufacturing sector. The cost of hardware is increasing, with memory manufacturers struggling with or moving away from commercial-based products to capitalize on opportunities in AI. AMD has threatened to enter or increase their impact on the consumer market in response to the shifts of other manufacturers, and Intel stated they will de-emphasize the consumer market, impacting both CPU and GPU manufacturing.
AI Disclosure and UK Government involvement
Dr. Thompson finished his presentation by speaking about the impact of new legislation. He mentioned the EU AI Act is starting to come into full force and discussed the AI disclosure and compliance requirements. He also mentioned the UK AI Copyright Consultation and the poor reception it has received as well as recent comments from Secretary of State for Science, Innovation and Technology Liz Kendall who is advocating for training every adult in the UK on AI, rather than addressing the more serious problems the technology is having on knowledge and creative economies.
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