AI and the problem of "doing more with less" | This Week in Business

AI is a touchy topic.

Last year, I went to Montreal for a Haven Studios presentation on how the PlayStation-owned developer is working to apply machine learning and generative AI technology to games.

After the presentation, I had a group interview with Haven's Jade Raymond and Leon O'Reilly along with PS5 hardware architect Mark Cerny. I wanted to follow-up on something he said during the presentation about how the technology might lead to reducing dev team sizes and companies making their games with fewer people. Cerny rankled at this.

QUOTE | "I did not say 'reducing dev team sizes'. I said 'making a large game with a team of moderate size.' And that is a very different thing." – Mark Cerny, before going noticeably silent for the rest of the interview. (Although to be fair, I did not direct my other questions directly at him.)

Like anyone working in AI with a basic grasp of optics, Cerny was understandably concerned about his words being misconstrued. He doubtless didn't want to come across as the sort of person who would champion new technology because it meant they could ditch a bunch of people to keep costs down.

He was merely saying that generative AI tools will empower small teams to punch above their weight class. He was talking about how they will reduce tedious scutwork, freeing creators up to focus on the more imaginative and exciting parts of their jobs. How they will speed up the iteration process, enabling developers to fit more revisions in the same amount of time, and ultimately produce better games.

He was talking about doing more with less.

You might have heard that phrase – "do more with less" – particularly if you've ever survived a round of layoffs at a company, or heard management explain how it was cutting the budget but not performance expectations.

Doing more with less is simultaneously the bane of the employee's existence and the dream of the employer

Doing more with less is simultaneously the bane of the employee's existence and the dream of the employer, a perfect formula for improving profit margins.

And sure, generative AI tools could allow a small indie studio to make games they otherwise wouldn't have the resources to make. And that sounds like a win, depending on how onerous the terms to use those tools are. (Given industry trends in everything from games to engines, I doubt it will be a pay-once perpetual license arrangement.)

But how will this affect the top end of the market where Cerny and his peers play? The trend ever since the industry started has been to do more with more. Even if generative AI does allow for greatly enhanced productivity, why wouldn't companies like Sony employ just as many people and simply make bigger, more complex games?

Well for one, they've been telling us that AAA development is unsustainable for a while now, and they've been ramping up budgets and team sizes reluctantly. Cerny himself was talking about this a dozen years ago.

QUOTE | "The problem is we've learned how to spend the money. If I go back to 1994 and somebody says, 'Here's $20 million to spend,' I would have absolutely no idea what to do with that money. We had no specialisation whatsoever in 1994. In 2011 we have the creative director, the game director, the director of actors, stunt co-ordinator, the guy who makes the plywood props, the audio scripter, the lighting designer, and the most recent of creations – the combat designer. " – Mark Cerny, bemoaning the "shaky" economics of modern AAA games at the 2011 DICE Summit.

He's not the only person from the PlayStation family to have complained about the skyrocketing cost of AAA development and pointed at the number of people employed as the key part of the problem.

QUOTE | "All the costs around gaming are labor costs, right? You don't have to build a factory. You don't have to turn sand into glass. It's just creativity and your ability to bring like-minded people together to accomplish something, but it's all based on the people... Those are all the costs associated with it." – In a 2020 presentation at Gamelab Live, former PlayStation Worldwide Studios head Shawn Layden identifies the culprit behind AAA's unsustainable budgets.

But let's assume for just a moment that publishers aren't using AI tech intending to cut down on headcount, and they just want the same amount of people to suddenly be radically more productive.

Cerny said that publishers had to learn how to spend money. He didn't know what he would have done with $20 million to spend on a development team in 1994 because the field simply hadn't seen such specialization to that point. That specialization was a reaction to the advancement of technology, the creep of budgets, the gradually escalating arms race producing new and unforeseen needs on game dev teams, and developers realizing they could pursue those roles as a career.

For AAA publishers and developers, spending more money was a necessary and rational response to changes in the market over time. Whenever I heard about budgets spiking (as with the jump to HD consoles), it was because there was a clear and pressing reason to spend that additional money.

AAA publishers have clearly articulated their financial incentive to run their growing businesses with fewer developers

If generative AI tools are as disruptive as their proponents claim – still a very big "if," it should be noted – that's a step change in productivity, possibly without time for development processes to adjust, for publishers to learn what to do with those extra developers. Put another way, would Cerny know what to do with the more than 1,700 people credited on Ratchet & Clank: Rift Apart if AI tools had made them all more productive such that essentially the same game could have been made with vastly fewer people?

I don't want to pick on Sony, because it's not like Sony is unique in complaining about how unsustainable AAA game budgets are. But AAA publishers have clearly articulated their financial incentive to run their growing businesses with fewer developers, to do more with less. And if generative AI tools can fulfill their promise, they will finally have the means to go with that motive.

The rest of the week in review

QUOTE | "As we saw customers accelerate their digital spend during the pandemic, we're now seeing them optimize their digital spend to do more with less. " – In a memo to staff, Microsoft CEO Satya Nadella blamed others doing more with less for the decision to lay off 10,000 employees this week.

QUOTE | "We will incorporate this in our own applications, so you can fully expect us to obviously [use AI]. Every product of Microsoft will have some of the same AI capabilities to completely transform the product." – Nadella also assured everyone this week that Microsoft is all-in on using its investment in OpenAI to help them do more with less.

STAT | $1.32 – The take-home hourly wage for some Kenyan workers at an outsourcing firm paid by OpenAI to remove toxic content from the training dataset of ChatGPT including descriptions of sexual abuse, hate speech and violence, according to a Time Magazine report.

QUOTE | "All of the four employees interviewed by Time described being mentally scarred by the work. Although they were entitled to attend sessions with 'wellness' counselors, all four said these sessions were unhelpful and rare due to high demands to be more productive at work." – A key excerpt from the same report.

QUOTE | "Songs arise out of suffering, by which I mean they are predicated upon the complex, internal human struggle of creation and, well, as far as I know, algorithms don't feel. Data doesn't suffer. ChatGPT has no inner being, it has been nowhere, it has endured nothing, it has not had the audacity to reach beyond its limitations, and hence it doesn't have the capacity for a shared transcendent experience, as it has no limitations from which to transcend. ChatGPT's melancholy role is that it is destined to imitate and can never have an authentic human experience, no matter how devalued and inconsequential the human experience may in time become." – In his personal newsletter, singer-songwriter Nick Cave talks about the limits of generative AI when asked by a fan what he thought of ChatGPT song lyrics "written in the style of Nick Cave."

QUOTE | "Correction, 1:55 p.m. PT Jan. 16: An earlier version of this article suggested a saver would earn $10,300 after a year by depositing $10,000 into a savings account that earns 3% interest compounding annually. The article has been corrected to clarify that the saver would earn $300 on top of their $10,000 principal amount. A similar correction was made to the subsequent example, where the article was corrected to clarify that the saver would earn $304.53 on top of their $10,000 principal amount.

"The earlier version also incorrectly stated that one-year CDs only compound annually. The earlier version also incorrectly stated how much a consumer would pay monthly on a car loan with an interest rate of 4% over five years. The earlier version also incorrectly stated that a savings account with a slightly lower APR, but compounds more frequently, may be a better choice than an account with a slightly higher APY that compounds less frequently. In that example, APY has been corrected to APR." – One correction on one AI-generated CNET article explaining compound interest.

Futurism first reported that the tech site has been publishing AI-generated explainer articles (edited by a person) since November, and it turns out you run into lots of problems asking a mechanical parrot to recap things it has no actual understanding of.

STAT | 40-50 - The number of people laid off this week by Fandom, including employees of gaming sites GameSpot and Giant Bomb, which it recently acquired from CNET parent Red Ventures.

QUOTE | "We are letting that team go even though we're thrilled with the work they've done." – In laying off nearly 300 people at Unity, CEO John Riccitiello makes it absolutely clear that excelling at the tasks assigned to them had no bearing on whether those people got to keep their jobs.

QUOTE | "This is part of our normal course of our business: We periodically make changes to our structure and our teams based on what we believe will allow us to deliver the best content and experiences for players." - Riot Games explains why it laid off 46 employees this week.

QUOTE | "It's an argument for unionization that someone who was part of the co-creation of that world and those characters isn't getting a credit or a nickel for the work they put into it. Maybe we need unions in the video game industry to be able to protect creators." - The Last of Us co-game director and former Naughty Dog developer Bruce Straley is unhappy about not getting credit or compensation from the HBO adaptation of The Last of Us.

I was going to say it'll take a long time for unions to become the norm if everyone has to wait until they're personally victimized by the status quo, but given the pace at which profitable companies are laying off people for capricious or arbitrary reasons, perhaps not.

STAT | 53% - The portion of developers in favor of unionization, according to the Game Developers Conference's annual State of the Industry Survey. Another 24% said maybe.

QUOTE | "Thank you to our friends at the Communications Workers of America (CWA) for bringing this issue to our attention and their tremendous work unionizing software developers, among others." – The firm of Migliaccio & Rathod LLP, at the end of its announcement that it is looking into a class-action lawsuit against Activision Blizzard for false advertising in Diablo Immortal.

I just want to say that ratting out Activision Blizzard like this is a hilarious bit of retaliation for the publisher's ongoing (and at-times illegal) union-busting activity, and I appreciate that the union wanted the publisher to know exactly who was dropping this flaming bag of poop on their doorstep, and why.

Given the recent $520 million settlement Epic Games is paying for wrong-doing around children's privacy and dark patterns that it called "long-standing industry practices," I hope every big publisher out there is thinking twice about fighting organization efforts mounted by the people who know exactly where the bodies are buried.

STAT | 13% - The year-over-year decline in console and PC games sold across Europe in December, according to the latest GSD data. As with other such reports recently, declines were sharp in catalog evergreen titles like Grand Theft Auto 5 and Mario Kart 8: Deluxe, while some new releases in annualized series like FIFA 23 and Call of Duty: Modern Warfare 2 beat their predecessors' December performance from last year.

QUOTE | "We, all of us here today, all of our teams around the globe, we are all part of creating this echo effect of joy. Our creators who bravely and intentionally release their visions to the world, particularly in the current culture of criticism and cancellation. Our players, who bravely and intentionally carve out time for our games to invite, rest, and rejuvenate their lives. And business leaders, we are called upon to have the courage to protect and nurture this collective joy." – In accepting the Andrew Yoon Legend Award at the New York Game Awards, Xbox head Phil Spencer invokes the spectre of the right-wing boogieman, "cancel culture."

I am intensely curious which game creators Spencer thinks have been unfairly cancelled so much that this is worth calling out in his acceptance speech. Is it Minecraft creator Markus "Notch" Persson, who Spencer's Xbox division scrubbed from the game and then snubbed from Minecraft's 10th anniversary celebration simply because he "bravely and intentionally" shared his bigoted views on LGBTQ people, race, feminists, and more? Come on Phil, if cancel culture is such a bad thing, why are you cancelling Notch? Oh, it's because he preaches some heinous beliefs and you don't want to support them or be seen as even tacitly endorsing them? Do tell.

If you think one of your game dev pals is being unfairly criticized, then by all means, use your platform to defend them from those scurrilous accusations. They might appreciate it, and frankly, we could use a little more pushback from platform holders against actually toxic portions of the fanbase.

But gesturing toward the preferred nomenclature used to keep high profile anti-semites, racists, and sex offenders from suffering consequences for their actions does nothing to help your pals and everything to make "cancel culture" an effective smokescreen for reprehensible behavior and beliefs.