The gaming industry just had its uncomfortable moment of truth about AI. Junghun Lee, CEO of Nexon Co. Ltd., essentially told everyone to stop pretending: "every game company" is using artificial intelligence, he says. The real question, according to Lee, is how studios differentiate themselves when "everyone is working with the same or similar technologies." His answer? Human creativity is what separates great games from forgettable ones.

The Arc Raiders Controversy Unleashed Industry Tensions

This debate exploded after Nexon published Embark Studios' extraction shooter "Arc Raiders," which faced immediate backlash over its AI use. Lee defended the technology in an interview with gaming news site Game★Spark earlier this month, arguing that AI has "definitely improved efficiency" and that "it feels like the 'average' of games and live services is gradually improving."

Embark Chief Creative Officer Stefan Strandberg struck a similar tone back in October, telling Eurogamer that while AI can "assist in some content creation," there are "no shortcuts to making great games." It's the kind of carefully calibrated statement designed to acknowledge AI use without admitting too much dependency on it.

Industry Veterans Aren't Buying the "Everybody's Doing It" Defense

Xavier Nelson Jr., founder of Strange Scaffold, wasn't having it. He called Lee's claims "normalization bullshit" on Bluesky, pointing out that "a lot of other studios" across indie and AAA development aren't using generative AI at all.

Tommy Thompson, founder of AI in Games, also disputed Lee's sweeping assertion. "Very few [studios] have gone all in," Thompson posted on Bluesky. He suggested these broad claims are particularly popular in Japan, where the government's "AI Action Plan" published last summer expects businesses to demonstrate they're embracing the technology. In other words, there might be some political theater happening here.

But Lee found an unexpected ally in Epic Games CEO Tim Sweeney, who jumped into the fray by posting in replies to Eurogamer's review on X. Sweeney argued that "political opinions" should stay in opinion sections rather than game reviews. When someone questioned whether disliking AI even counts as a political stance, Sweeney responded affirmatively, suggesting that perspectives on AI's overall impact remain fundamentally speculative.

What AI Is Arc Raiders Actually Using?

Embark Studios Design Director Virgil Watkins recently clarified the situation to PCGamesN. The studio hires and contracts voice actors specifically for AI use, which powers features like the "ping system" that can announce every item name, location, and compass direction. Arc Raiders "in no way uses generative AI whatsoever," Watkins emphasized, explaining it relies on "machine learning, or reinforcement learning" instead.

The Arc Raiders Steam page acknowledges that procedural and AI tools assist with content creation, but stresses that the final game reflects the development team's creativity. It's a distinction that matters to some players and developers, even if the line between different AI types feels increasingly blurry.

The Big Publishers Are Going All In

Regardless of the controversy, major publishers are betting heavily on AI. Electronic Arts Inc. (EA) has reportedly told employees to view the technology as "thought partners" while requiring workers to train AI on their work, according to Business Insider. EA CEO Andrew Wilson called AI "the very core of our business" back in September 2024.

South Korean publisher Krafton Inc. announced plans in October to invest $70 million to become an "AI-first company." And Sony Group (SONY) has outlined its own plans for incorporating AI into future games.

So maybe Lee has a point about widespread adoption, even if his "every game company" claim feels like an overstatement designed to normalize what remains a contentious practice. The reality seems more nuanced: AI is spreading rapidly through game development, but not every studio is embracing it equally, and many are carefully distinguishing between different types of AI use. Whether that distinction matters to players, or whether it's just corporate semantics, remains an open question.