[cdcox]

I think there are few plausible reasons not mentioned.

We are still early in the tech. 2021 LLMs were not fit for any real purpose outside zany Madlibs. The tech has only really gotten fit for purpose since GPT4 and coherent models only got cheap and fast enough since llama 2 (July 2023). Even then smart models only got affordable around Deepseek v2 (May 2024) which was the first gpt4 level model to consistently serve subdollar per million tokens. You need at least a GPT4 level model to make a really interesting game. That's like a blink of time in game making time, indie games have 2-3 year cycles at best and AAA are like 5+. Even now fast, tool native interaction is only just coming online and there are no cheap models for that. Really fun game playing AI needs something like that to be magical.

There are AI games they just don't look like AI games neal.fun's Infinite Craft made a boat load of money and was very popular and it was powered by a Llama backend. Character ai and it's dozen copycats are like online storytelling/roleplay things. These are fairly popular. That could be a game or like a game platform or maybe it's more like fanfic. It has no fail state but people have made variants with fairly complex rules and states. Skryim and a few other games have pretty popular AI mods that let you add in NPC interactions that can talk, see, and even change their interactions with AI. The Skryim one Mantella has more than ~100k downloads.

We don't really have a northstar yet. Making a good game is really hard and usually takes someone doing something weird and clever. Minecraft is obvious in hindsight but many games on the way failed to make 'legos on the computer' fun. Incorporating AI breaks all the 'rules' of gaming. It operates slowly, it has high potential to break the rules and it has nearly unrecoverable failure states. Indie devs haven't figured out the best way to handle this and I suspect most big companies have just washed their hands of the whole thing until the AI gets faster, cheaper, and more stable.