Generative artificial intelligence (AI) is no longer only a research field in game development; it is a production technology already embedded in asset pipelines, narrative tooling, and user-generated content platforms. This paper traces the lineage from early rule-based game AI to today’s diffusion and transformer models, then analyzes seven recent case studies, from Ubisoft’s Ghostwriter to King’s AI-assisted level factory, to map how automation is reconfiguring labor, authorship, and creative risk. I frame AI as a mutable design material, showing how it compresses iteration cycles yet introduces new curatorial and ethical overheads. Survey data and studio interviews reveal a widening polarity: technical roles see efficiency gains, while creative disciplines worry about stylistic homogenization and job displacement. I close by outlining research agendas in critical AI literacy, toolchain interoperability, and governance of machine-augmented creativity.