> 1. Imagine a video game like Red Dead Redemption where each NPC is voiced by AI and can respond to you in a convincingly human fashion. Their responses and even the plot of the whole game can change based on your interactions with NPC's.

Have you ever gone exploring in Minecraft, or No Man's Sky? Those games are effectively infinite, but I find they run out of interesting generated content after maybe 10 or 20 hours.

The problem is, once you see the outlines of the world generation, your brain kind of fills in the space between. I've seen blue grass, and I've seen purple oceans, so blue grass next to a purple ocean isn't uniquely interesting.

Or another example would be the radiant AI from Skyrim that could automatically generate quests for the players.

I think that using an LLM to model NPCs runs into the same problem(s). In the end, there are two cases: either the behavior is constrained enough to keep the game on the rails, and thus the randomness in the dialogue only ads some flavor but there isn't enough freedom to generate new quests and directions for the story. In that case, the added space to explore really doesn't change the nature of the game or add much.

In the second case, you let the model go off the rails and have a harness around it that generates a world matching the hallucinated responses, which would allow an LLM to dynamically generate quests and such, but then the design of your game is subject to being compromised by the randomness of an LLM. E.g. it's not just Red Dead Redemption 3.0 with some funny characters, sometimes it's a historical game and other times aliens show up.

Maybe that's compelling to some people but I've done acid before and really don't need all my media to recreate that sensation of reality drifting.