alt Hacker NewsNot to be argumentative since I broadly agree with your characterization (and the mass cancelling of games is concerning), but I think AI will revolutionize at least asset creation.
I worked on sports titles for a while and there was literally an army of contractors making uniforms, shoes, hairstyles, etc. I'm pretty convinced gen-AI will make that job obsolete.
I think the most interesting argument similar to yours centers around the problems of "social VR", that is, maybe people would like something like Horizon Worlds if the authoring tools weren't so bad. Part of the problem is that affordable XR headsets have a tiny amount of RAM and headsets with a moderate amount of RAM are crazy expensive and headsets with enough RAM just don't exist. Assuming you had something that could run generated worlds it would certainly be nice though if somebody could prompt them into existence.
I think you could make decent assets with AI but I don't know if the people who make video games today could. There's a certain kind of tastelesness which seems to infect people when they get infected with AI fever -- I think "gamers" are on edge for signs of this kind of thing because the AAA game makers give them off copiously no matter what they do.