One thing that is not yet clear after AI boom is how will it affect Games. One day i was talking to a character in character.ai, i prompted the character to be a factory worker with minimal education, when i asked how to write c++ code to find factorial of a number it gave me the code. certainly that's not how LLMs can be implemented in games. LLMs can take the story beyond the bounds of the gameplay.
Another thing that i noticed is that whichever game is using LLM in NPCs, they are doing so only on the characters which are currently talking with the user. but this is not how you generate a completely random world, you need to ensure that agents interact with each other as well. But this is more of a scalability issue, imagine 100 NPCs in the world fighting for LLM API every second. This can be extremely expesive.
Another issue is Alignment in LLMs.
If anyone is working on this, what are you aiming for? creating a character engine? or creating new experiences for the user?