Game AI has nothing to do with AGI (or even regular AI) beyond the surface level description OP provided. The reason game AI hasn't progressed in the last few decades isn't because technology is holding us back - after all we can already achieve impressive machine learning feats using current-gen GPUs - it's because bad NPC AI is by design, so players can learn to overcome them and succeed. Very few people want to play a game that always beats them. Most games use simple state machines or behaviour trees with predictable outcomes for their NPCs because it would be a waste of effort to do anything more, and actually negatively impact the game by making it less fun and burning engineering time on things the player won't benefit from.
Modern big-budget games incresingly don't use behavior trees and state machines for their AI anymore. This approach has been superseded by technologies like GOAP [1] or HTN [2]. These are computationally very expensive, especially in the constrained computation budget of a real-time game.
While it's true that game AI is often held back by game design decisions, it's not true that technology isn't holding us back in this area as well.
You don't optimize for competitive performance (it is trivial to design a game AI that beats every player every time given that you have control over tilting the playing field). You use the AI for bounded response variations (all NPC's act 'natural' and different from the others) and engaging procedural generation (Here is a chapter of a story, now draft an entire zone with landscape, NPC's, cities, quest story lines, etc.).
Games like PvE MMO's need to find a way to produce engaging content faster than it can be consumed at a pricepoint that is economically viable. The way they do it now is by having the players repeat the same content over and over again with a diminishing returns variable reward behavioral reinforcement system.
One of the design goals of game AIs is also that they are fun to play against. If they are too smart and coordinated, they try to throw you off in a way that feels "unfair" to the player.
You have to hit a spot where they are sometimes a bit surprising, but not in a way that cannot be reacted to quickly on your feet. This throws realism out of the window.
But why would good game AI have to make the characters better than the player? The focus on NPC AI should be to make them interesting, not necessarily really tough opponents.
You're assuming game AI means an agent that directly competes with the player.
Plenty of games have NPCs with scripted routines, dialog, triggers, etc that could be improved either by reducing the dev cost to generate them without reducing quality or reacting to player behavior more naturally.
Except in those cases it's even more important that the NPCs don't do anything unexpected. Those NPCs are like actors in a stage play, you don't want them to come up with their own lines and confusing the audience.
Don't forget there is a certain randomness with 'more natural' and with randomness you're going to invite Murphy to the party.
Not all NPCs have to be part of a script. They can just be additional characters that add life and realism to the simulated world.
A weapons maker with a unique backstory and realistic conversations that reference it is more interesting than a bot, and opens up the possibility of unscripted side-quests.
In many cases maybe. Personally I would love to play a game with a world inhabited by "individual" NPC AI:s, where they can influence the world as much as I can, with no specific act structure or story arc.
Some significant part of gaming is risk-free experimentation in a simulated world. The experiments possible are bounded by the simulation quality of the world. More realistic NPC behavior would open up for a lot more games.
There is an older game called STALKER which had (limited) elements of what you describe: autonomous NPCs which influence the game world. Even though it was limited, the NPCs just battled for control of certain territories, I always thought it was a really neat mechanic. It made the world feel more 'real' and alive.
You would see these factions fighting and gaining/losing territory throughout the game. You could chose to help them or just pass on by, but the actions progressed regardless of your choice.
> it's because bad NPC AI is by design, so players can learn to overcome them and succeed.
That's part of it, but there are other factors too. The more complex the AI, the harder (i.e. more expensive) the game is to tune and test. Game producers and designers are naturally very uncomfortable shipping a game whose behavior they can't reasonably predict.
This is a big part of why gamers always talk about loving procedural generation in games but so few games actually do it. When the software can produce a combinatorial number of play experiences, it's really hard to ensure that most of the ones players will encounter are fun.
If the "game" is survival and selection for attention (to get compute space, so literal survival) from humans, "interestingness" is what will matter and I think what people will end up finding most interesting is NPCs that feel like other identities they can empathize with and interact with -- work with to build things, spend time in a community with, fall in love with and so on. This really is about virtual world construction more than simple competitive games. I think it may not end up looking like any particular sense of "AGI" we can currently imagine (I really think we can only properly imagine it exactly when it exists, and it seems not to yet), but it will probably be "distributed" enough that the interfacing may not feel like anything at any one particular site.
The game may even be played by saying things on Twitter and becoming interesting enough that people DM you and try to build a relationship with you, while you're a bot.
