Games + AI are free from noise, evolving from uniformity to personalization.

In the new three - year era of AI, from technological discussions to product applications, it has become more practical and tangible step by step.

As a pioneer test - field for technological progress, what new possibilities has the game industry unleashed due to technological development?

Recently, 36Kr Games was invited to participate in the podcast program of "Innovation Ren". As a representative of the "new" media in the industry, together with Zhu Chuntao, the founding partner of "Pacer venture studio" who represents "new" capital, they discussed new technologies, new markets, and new players related to games & AI, and talked about future trends.

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[Guest Introduction]

Zhu Chuntao | Founding partner of Pacer venture studio

Future of AI Driven Creativity, let every creative idea be seen by the world.

Liu Shiwu | Editor - in - chief of 36Kr Games

Analyze the development wave of the game industry from a technological perspective.

The following is the transcript of the dialogue (abridged):

The unique combination of games + Venture studio

Innovation Ren: We've noticed that there have been many new funds in different forms this year. Each has its own unique model, but everyone is doing something new in the new era. Why did you choose to enter the game industry? Do you think there is a better fit between games and the venture studio model?

Chuntao: It can be explained from both internal and external factors. Internally, our team has rich resources and experience in the upstream and downstream of the game industry. We have a relatively high degree of confidence in expanding this business. I've been involved in game development for 10 years and then engaged in game industry investment at Chuangxiang for 9 years. One of my two partners has nearly 20 years of experience in investment and mergers and acquisitions, including investments in Unity and mergers of Riot Games. The other is a senior game developer with 22 years of R & D experience.

Externally, the domestic game market had a scale of 238 billion yuan last year, and the growth rate of mobile games was 5%. An annual growth rate of 5% sounds good, right? But we should note that the mini - game segment had a market size of nearly 40 billion yuan last year, with a growth rate of 99%. What does this indicate? It shows that if you break it down, the growth of the entire mobile game market is actually flat, but one segment is growing extremely rapidly and accounts for nearly one - fifth of the total market. On the other hand, it also means that the other four - fifths are actually stagnant.

The emergence of AI can greatly restructure the game industry chain. We believe that now is the time to look for new opportunities. We focus on this small industry worth over 200 billion yuan and transform it through the familiar AI process. On the one hand, we make new adjustments to our VC structure. On the other hand, we restructure the game R & D system we choose. These are two major changes for us.

Shiwu: This trend actually reflects many phenomena. The investment industry in China has a history of more than 20 years, but there are still some areas that are not fully mature, especially in the game industry or the broader creative industry. When a company or a studio creates a super - popular game, its valuation soars immediately. However, you'll find that there are still few investors. Because no one knows how their next game will turn out, or perhaps they are only good at making this type of game and will run out of inspiration after that. The root cause is actually the immaturity of game industrialization in China. If our game industrialization is mature enough, a small team of dozens of people can also create a very successful game.

When we have such industrialization capabilities, we may not need to operate within the investment system dominated by traditional strategic investment institutions. In that case, institutions like Pacer will have a lot of room to play. Especially with the arrival of the AI era, AI can liberate a lot of content productivity. The game industry has a very high demand for content productivity, so it is likely to be a breakout point in this wave of AI.

Many popular games seem to have no discernible rules. The process of industrialization is actually a process of finding rules.

How does AI empower games?

Innovation Ren: How does AI empower games? How can we use AI to find rules and achieve game industrialization?

Chuntao: AI empowerment is actually building a silicon - based creativity system for games. As Shiwu mentioned earlier, the core issue is that you don't know if the product will have a positive impact on the financial statements, right? In fact, from market judgment (which we call "project approval determines success or failure") to development and subsequent operation, there are many potential problems. To stand out in the market, R & D teams need to constantly brainstorm and come up with novel and unique game ideas, then combine and restructure them. However, finding market - recognized ideas from a vast number of ideas is not an easy task. You need to analyze, evaluate, and design each idea systematically, while also referring to market trends and target user preferences. This process actually consumes a lot of human and time resources, and these ideas are still likely to be rejected after evaluation.

Ultimately, AI is a collection of human experience. After digitizing human experience, we can turn the data into the final game experience through a set of algorithms or processes. After introducing AI, our problem becomes how many meaningful game experiences we can create within the given time and resources. This is also a problem we can solve. By using AIGC to restructure the entire game R & D process and structure, we can create as many game experiences as possible with limited resources.

Shiwu: Take games like GTA for example. There's no doubt that it's a global top - tier game. GTA 5 is great, but it may take 10 years to update to GTA 6. It's been 12 years and we still haven't seen it. How many 12 - year periods do we have in our lives? Just joking. In contrast, it only takes two or three years to make a special - effects movie. The trial - and - error cost of traditional large - scale games is relatively higher.

Chuntao: The deep learning of AI can transform any form of data. We believe that artificial intelligence will be highly involved in the field of applied science. This is similar to the emergence of highways, computers, and the Internet. The trend of AI is irreversible and is bound to come.

Innovation Ren: As a creative industry, when we use AI to improve the efficiency of games, will there also be some negative impacts?

Shiwu: Several large - scale games have emerged in the breeding - type game genre in recent years, but these popular games often come with a lot of negative feedback. The reason is simple. For developers, they create these games to meet the needs of the largest number of users. If in the future we can customize and generate game content according to each person's psychological state or user needs, it will definitely be a huge market.

Chuntao: Making various games is actually to meet human emotional needs. These needs will be discovered as the environment, technology, and people change, but the underlying needs they satisfy remain the same. Therefore, the logic for the continuous development of the game industry and the creative industry lies in human exploration of the unknown world and the need for stories, which will keep the creative industry evolving and bring more content and form diversity. The addition of AI actually enriches the game creative industry rather than making it more homogeneous. For example, when we add random cards to a game, this new gameplay combines two existing gameplay methods and achieves very good results. We need to collect these experiences and then disassemble and combine them into a new product.

The form, concept, and strategy of Pacer venture studio

Innovation Ren: What are Pacer's strategies and methods?

Chuntao: Our focus is on AI + applications, and we also consider games as a part of applications. In the first stage, we started with games. We believe that games are a direction where we can quickly achieve results in terms of technology and commercialization.

We have broken it down into four parts and re - defined the functions that AI can perform in game development according to our goals. The first part is called "Prophet", where we disassemble and recombine game ideas. The second part is called "Wisdom Eye", which is our self - developed AI intelligent motion capture system. As a tool for generating visual content, this system has recently been collaborating with many leading companies. We unveiled the product last month, and everyone was quite impressed. The third part is about AI - generated code. In fact, it's not just code generation; we can directly deliver a playable game world. We can quickly adjust and generate a game world with gameplay through natural text and semantics, which is equivalent to generating a packaged program. It can automatically generate scenes, underlying game logic, designed levels, and interactions between characters. The fourth part, which involves distribution and operation, is still in the planning stage.

Innovation Ren: Then the game development structure will have a significant efficiency improvement compared to traditional methods.

Chuntao: Yes. Currently, many developers only focus on improving efficiency in single aspects. We are restructuring the entire development process to incubate our projects.

Innovation Ren: What's the current progress in investment and incubation?

Chuntao: The projects we are incubating now are those in the modules I just mentioned. These are the projects for our first - phase incubation. We must have our own product to convince others that this model can work. Just like Fortnite for Unreal Engine, we have to do this. First, we need to make the tools (like hammers, nails), and then we can build the ship. I estimate that we will have a demo ready by the end of this year.

Innovation Ren: What form will Pacer take in the future? You mentioned earlier that our positioning is AI + applications, and we entered the game industry. If the game incubation matures in the future, where will the next industry focus be?

Chuntao: Games are not just a simple concept. Their logic can be embedded in many applications. Currently, our first step is to develop products that fit the traditional game definition. Later, it may be applications with game - like gameplay, such as Duolingo. We can mass - produce applications that can directly generate revenue from the C - end. Our advantage lies in the high - efficiency production after the entire process is streamlined. We can quickly turn creative ideas into reality.

In some controllable experiences, we can enable players to have a great experience through their efforts, whether it's from games or other activities like fitness, running, or learning. This is the underlying logic and the ideal form we envision.

This article was first published on "36Kr Games".