Amid an explosion of growth in the global gaming industry, a new generation of startups aims to provide the tools used by game developers, whose industry is projected to grow by $100 billion in the next four years.
Inworld AI, a post-pandemic upstart bringing generative AI to game developers, has raised fresh capital in a deal that catapults its valuation to over $500 million. Investors last valued the company at $173 million in July 2022, according to PitchBook data.
Lightspeed led the roughly $30 million round, with participation from investors including Eric Schmidt’s First Spark Ventures and Kleiner Perkins, along with corporate backers like Samsung Next and M12, Microsoft‘s venture arm.
Investors bet roughly $2.3 billion on VC-backed game development startups last year and have already deployed nearly $1 billion this year, according to PitchBook data.
Inworld’s platform provides generative AI tools that allow developers to create dynamic, unscripted non-player characters, or NPCs.
CEO and co-founder Ilya Gelfenbeyn described the technology as a text-based system that helps creators build highly detailed game characters. Developers can write a casting call-like description of a character they’re looking for and Inworld’s platform will generate it.
Gelfenbeyn previously worked at a startup that Google later acquired and integrated into its voice assistant project. While he himself isn’t much of a gamer, Gelfenbeyn said he’s been put off as games get increasingly scripted, leaving less time for dynamic gameplay.
Founded in 2021, Inworld hopes its technology will help rein in game development costs, which have soared in recent years.
During Microsoft’s battle with the Federal Trade Commission over its purchase of Activision-Blizzard, it was inadvertently revealed that it cost Sony $212 million to create PlayStation game “Horizon Forbidden West.”
Inworld’s funding comes on the heels of rounds raised by the likes of Epic Games and Runway, whose creative tools are used by large and independent game development teams alike. In April 2022, Epic raised $2 billion from investors including Sony and Midway Venture Partners. In June, Runway closed a $191 million Series C backed by investors such as Nvidia and Felicis.
The startup’s funding also comes amid Hollywood’s strikes. Voice actors for video games, who are affiliated with the Screen Actors Guild-American Federation of Television and Radio Artists, aren’t on strike, but their contract is set to expire in November, according to a SAG spokesperson.
Gelfenbeyn said that Inworld’s platform isn’t designed to be a replacement for voice actors, who will still be part of the character development process.
While Inworld uses 30 different kinds of machine learning models like OpenAI’s ChatGPT, most of them are proprietary and come with override controls to ensure that the characters can conform to creators’ guidelines for proper dialogue or behavior.
Ultimately, Gelfenbeyn hopes that Inworld will help give rise to entirely new experiences and worlds. “You can just imagine any universe,” he said, “and then, it’s there.”
Featured image by Mara Potter/PitchBook News
