Microsoft’s Xbox and Inworld AI have partnered to create AI-powered game development tools for narrative and character creation.

This multi-year co-development partnership is aimed to enable AI-inspired creativity in video games. The partnership is a quest to deliver an accessible, responsibly designed multi-platform AI toolset.

This toolset is geared toward assisting and empowering creators in dialogue, story, and quest design. Inworld AI recently raised $50 million at a $500 million valuation. Not bad for a new generative AI startup.

“Together, we aim to deliver an accessible, responsibly designed multi-platform AI toolset to assist and empower creators in dialogue, story, and quest design. As with all creator tools at Xbox, our goal is to deliver state-of-the-art AI for game developers of any size, anywhere in the world, and on every platform where players want to play,” said Haiyan Zhang, general manager of gaming AI at Xbox, in a statement. “We want to help make it easier for developers to realize their visions, try new things, push the boundaries of gaming today, and experiment to improve gameplay, player connection and more.”


GamesBeat at the Game Awards

We invite you to join us in LA for GamesBeat at the Game Awards event this December 7. Reserve your spot now as space is limited!

Learn More

The collaborative effort will marry Inworld’s expertise in generative AI models for character development with Microsoft’s cutting-edge cloud-based AI solutions, including Azure OpenAI Service. And Microsoft Research’s technical insights into the future of play will play a pivotal role, and Team Xbox will contribute its strengths in developing accessible and responsible creator tools for all developers.

The partnership will introduce two critical tools:

AI Design Copilot: This tool is designed to assist and empower game designers in exploring more creative ideas. It transforms prompts into detailed scripts, dialogue trees, quests, and more.

AI Character Runtime Engine: This engine can be integrated into the game client and enables entirely new narratives with dynamically generated stories, quests, and dialogue for players to experience.

Unlocking creativity with an AI co-pilot

Inworld AI is creating AI-driven virtual characters.

During the pre-production phase of game development, designers, developers, and writers lay the foundation for a game’s world, lore, mechanics, narrative events, and character storylines. This groundwork informs scripts, art direction, and core game loops during production.

The AI co-pilot that Xbox and Inworld are building aims to reduce time and resource constraints during production, allowing developers to ship games faster and craft more expansive and immersive worlds and stories. The co-pilot serves as an assistant to game developers, taking their creative ideas and transforming them into detailed scripts, complete with dialogue trees, quests, and more.

Elevating NPCs with an AI character engine

Kylan Gibbs is cofounder of Inworld AI and a speaker at our recent GamesBeat Next event.

A significant challenge in gaming is creating more engaging and dynamic non-player characters (NPCs).

While 84% of gamers value NPCs, many are frustrated with their repetitive dialogue and inability to adapt to in-game actions. The future, according to the Future of NPCs report, lies in advanced AI NPCs. About 99% of gamers believe that advanced AI NPCs will improve gameplay, with 81% willing to pay more for them.

Inworld’s character engine aspires to bring life to characters and virtual worlds in an unprecedented way. It shifts from scripted player-character dynamics to real-time adaptation to player actions and choices, providing a heightened sense of agency and engagement.

The collaboration will emphasize expanding the character engine’s AI capabilities and optimizing it for runtime performance. Developers can harness this technology to create imaginative experiences.

The future of AI in gaming

Inworld AI
Inworld AI is working on AI tools that will work with popular game engines.

AI has long played a crucial role in game development, with applications ranging from enemy AI to procedural generation. The advent of large language models and generative AI is opening new horizons for storytelling and character engagement within games.

Inworld’s advisor and Electronic Arts cofounder, Bing Gordon, highlighted the potential of AI to create immersive worlds and sophisticated narratives that draw players deeper into games.

“For decades the biggest advancements in gaming have been through improvements in visual fidelity and graphics,” Gordon said in a statement. “But AI will enable truly immersive worlds and sophisticated narratives that put players at the center of the fantasy. Moreover, AI that influences fundamental game mechanics has the potential to increase engagement and draw players deeper into your game.”

Inworld has been addressing the challenges that game developers face when integrating generative AI technologies and working with teams from companies like Team Miaozi (NetEase Games), Niantic, Unity, Unreal Engine, Nvidia, NBCUniversal, and more.

The collaboration between Xbox and Inworld AI represents a significant leap forward in the gaming industry, promising to shape the future of game development through the power of artificial intelligence.

“One of my fondest memories of Xbox dates back to Halo 3 when I experienced co-op play for the first time. I remember surviving wave after wave of relentless enemies and chasing down survivors while playing in infection mode,” said Ilya Gelfenbeyn, CEO, Inworld AI, in a statement. “Halo 3 debuted the first multiplayer gaming service with Xbox Live and I’ve continued to admire the contributions Xbox has made to gaming over the years.”

He added, “Not only has Xbox released iconic games like Starfield and Minecraft, it has also created an ecosystem of services, technologies, and capabilities to unlock the creativity of game developers and capture the imaginations of gamers everywhere. It’s a journey that Inworld couldn’t be more proud to be a part of.”

GamesBeat's creed when covering the game industry is "where passion meets business." What does this mean? We want to tell you how the news matters to you -- not just as a decision-maker at a game studio, but also as a fan of games. Whether you read our articles, listen to our podcasts, or watch our videos, GamesBeat will help you learn about the industry and enjoy engaging with it. Discover our Briefings.