Microsoft is teaming up with Inworld AI to enhance NPCs in video games. Wikimedia Commons

It looks like Microsoft is set to take the gaming industry by storm with the help of generative artificial intelligence (AI). As part of its plan, the Redmond-based tech giant recently announced an Xbox partnership with Inworld AI.

In a blog post shared on the company's official website, the general manager of gaming AI at Xbox Haiyan Zhang said: "Partnering with Inworld is an important step in our journey to empower game developers."

It is no secret that generative AI is capable of radically overhauling human life. Taking things to the next level, Microsoft and Inworld AI have joined forces to make Xbox game development tools that will come in handy for creating AI-powered characters, stories and more.

How generative AI can improve NPCs in video games

The technology can be used to enhance non-playable characters (NPCs) in video games. It is worth noting that NPCs usually run on limited scripts. So, it will be interesting to see whether Microsoft
Xbox and Inworld AI partnership will give them better dialogues.

This aligns with a previously spotted job listing that indicated Microsoft is gearing up to bring AI-based features to games. Now, chief product officer and co-founder of Inworld AI Kylan Gibbs has further hinted at the impending arrival of AI characters to Xbox.

"We're creating the tech that allows NPCs to evolve beyond predefined roles, adapt to player behavior, learn from interactions, and contribute to a living, breathing game world," the top executive said.

According to Gibbs, AI NPCs are a paradigm shift for player engagement. Moreover, in an interview with CNBC's Jim Cramer last month, Take-Two Interactive CEO Strauss Zelnick said generative AI is capable of transforming gaming and attracting new consumers.

The interaction between chips and gaming has played a key role in the success of Nvidia for years now. The gaming industry has finally realised that AI will soon become popular.

Vice president of developer and performance technology at Nvidia John Spitzer recently told CNBC: "All developers are interested in how artificial intelligence can impact game development process".

Inworld advisor Bing Gordon acknowledges the most notable advancements in gaming in recent decades have been in the form of visual fidelity and graphics improvements. In fact, he believes AI will remake the world of both the gamer and game designer.

In line with this, data shared by a recent Bain study suggests AI is already being used to carry out some tasks including preproduction and planning out of game content. The technology will soon be used to develop characters, dialogue and environments.

As part of their partnership, Microsoft and Inworld will test design time and assistance with narrative generation. Having AI generate individual backstories for each NPC will save a lot of development time and using generative AI for interaction between a player and NPCs could enhance gameplay.

Aside from this, the American software maker is reportedly gearing up to bring Xbox Cloud Gaming to PC.