Epic plans to let AI train on Unreal Engine output as Valve says it won't gatekeep AI tools

Wednesday, October 28, didn't bring one giant launch in AI and games. What it brought was a set of decisions about who gets to set the rules. An engine maker is loosening its own limits on AI training. The biggest PC store says it won't police which tools developers use. Inside one of the largest publishers, staff say AI is being pushed hard after layoffs. At Rockstar, workers are about to vote on a union deal that puts AI policies on the table next to pay. And NVIDIA released a small AI model meant to run talking game characters on your own PC.

Here's what happened, in plain English.

Epic plans to let AI train on what you make with Unreal

A game engine is the software studios build their games on. It handles the graphics, physics, sound and much of the plumbing, so a team doesn't have to build all of that from scratch. Unreal Engine, made by Epic Games, is one of the most popular, and it's the engine behind Epic's own Fortnite. Epic also makes MetaHuman, a tool for creating very realistic digital people for games and films.

Every engine comes with a license, the EULA (end user license agreement), which is the set of terms you accept before you use it. Right now, Epic's terms say you can't use what comes out of Unreal Engine or MetaHuman to train AI models.

That came up after a Kotaku article on Monday. Asked on X whether Epic restricts AI training, Epic's CEO Tim Sweeney replied: "Yes currently but we are working to remove this restriction from EULA terms." He added that each game made with these tools is released under terms the developer chooses, which can allow or restrict AI training.

In other words, Epic would step back from a blanket ban, and each studio would decide for its own game whether its output can be used to train AI. Game Developer reports that Epic hadn't commented beyond Sweeney's post when it published, and there's no date yet for when new terms would take effect. The new wording of the EULA hasn't been published either.

It fits a broader pattern. Epic has been leaning into AI in its own work, and Sweeney has been one of the loudest voices in games arguing for it. Loosening the training rule would make Epic's tools more open to AI as well. For developers, the practical change, if it goes through, is a new choice to make: whether what they build in Unreal can become training material for someone else's AI.

Valve answers worries about AI games at Next Fest

Steam Next Fest is Valve's regular festival of free game demos, and it has become one of the most important moments for small studios trying to get noticed. The latest edition left some developers worried that AI-made games and copycats of popular games were making their own work harder to find.

On Tuesday, Valve responded. Two members of its Steam business team, Tom Giardino and Marc Wilkinson, spoke at Steam Indie Connect, an event in Busan, South Korea, as reported by Inven Global.

Wilkinson acknowledged the problem directly. "We are fully aware of the situation," he said, adding that a significant number of people at Valve are thinking about how to solve it. He also explained one reason low-quality games show up: Next Fest shows games at random for the first two days, so every entry gets some initial exposure. He called it a trade-off, one that means some low-quality games get seen.

Giardino was clear about what Valve won't do. "We don't want to be gatekeepers telling developers which tools they should or shouldn't use," he said. Instead, according to Inven Global, he described the goal as making Steam a smarter and more dynamic platform rather than limiting who can get onto it. TheGamer read it the same way: Valve wants to improve how the store surfaces games, not restrict developers by the tools they use.

Giardino also had advice for developers worried about clones: rather than relying on a single mechanic that someone can easily copy, keep growing your game. And he pushed back on the idea that release day is the end of the job, saying launch "is actually the starting line."

For a sense of scale, Inven Global reports that Next Fest had roughly 50 to 100 games a few years ago and now has thousands. That growth is part of why curation has become a hard problem, with or without AI.

This matters because Steam already asks developers to disclose when a game uses generative AI, the kind of AI that creates new images, text, voices or code from a prompt. Valve's comments suggest it will keep using labels and discovery tools rather than outright bans.

EA staff describe a hard push toward AI

Electronic Arts, the publisher behind The Sims and Battlefield, is going through a difficult stretch. It recently cut about 400 jobs and closed BioWare, the studio behind Mass Effect and Dragon Age. Other studios, including Maxis, Full Circle, Motive, Respawn and Ripple Effect, were also hit. That came less than three months after a group of investors led by Saudi Arabia bought EA in a deal worth about $55 billion.

Current and former employees spoke to the games industry site Vertical Slice without giving their names. Much of what they described was about morale and management, but AI came up repeatedly.

According to the report, generative AI is being pushed heavily inside the company, though it isn't mandatory yet. One source said EA won't call the tools a mandate, but makes it very difficult to do your job without them. Another said the message from every manager they had heard was "this is the future, you have to get onboard." A third said upper management was very excited about Claude, Anthropic's AI assistant, and about what AI could make possible.

Vertical Slice says it asked EA for comment; its report doesn't include a reply. It's worth keeping in mind that these are anonymous accounts from inside the company, and that EA hasn't responded to them publicly.

The tension here is familiar across the industry. Companies see AI tools as a way to do more with smaller teams, while the people doing the work worry that the same tools are being used to justify cuts, or that they're being asked to adopt them without much say.

Rockstar's union deal puts AI policies on the table

At Rockstar Games, the studio behind Grand Theft Auto, workers in the UK will vote on whether their union is officially recognised. When a union is recognised, the company formally negotiates with it on workplace issues such as pay, rather than dealing with each worker on their own.

According to Vertical Slice, the vote runs from November 12 to November 26, right around the launch of Grand Theft Auto VI on November 19. Staff have been meeting with Rockstar since July to agree the terms. The recognition deal, agreed by workers and management, would give employees more influence over pay and bonuses, overtime, redundancies, flexible working, and "generative AI policies."

That last item is the one to notice. AI rules are starting to sit alongside pay and job security as something workers negotiate over. If the vote passes, Vertical Slice says it would be the largest recognised union in the UK games industry.

Shanti Easton-Steel, a member of the union's committee, told Vertical Slice that the vote is about honesty and openness around the decisions that affect staff. "This is our moment to secure a window onto the decisions that shape our lives," she said.

The vote comes while Rockstar is in a legal dispute with 31 UK workers it fired. The workers say they were dismissed for union activity; Rockstar says it was for leaking confidential information. Closing submissions are scheduled at an employment tribunal in Glasgow on November 17 and 18.

NVIDIA releases a small AI model for game characters

For people with a gaming PC, NVIDIA, the company behind GeForce graphics cards, released a new small AI model built for game characters, called Nemotron 3.5 Bolt. The details are on NVIDIA's developer blog.

A small language model is a compact version of the kind of AI that powers chatbots, small enough to run on your own computer rather than in a large data center. For games, that means a character can respond to you without a server somewhere doing the work, which matters for speed and for games that need to run offline.

NVIDIA says the new model delivers about 40% higher average quality than its previous model on relevant benchmarks, and that it produces up to about 80% fewer tokens (the small chunks of text an AI model writes) than comparable models. It also says the model is designed to leave headroom on the graphics card for the game's rendering and for local speech models. These are the company's own numbers.

NVIDIA points to a few places where its character models already show up. PUBG ran AI teammates in a public beta using NVIDIA's first-generation model. Aniimo, a game due in early 2027, uses the second-generation model to turn in-game pets into companions that react to your voice. And SkyrimNET, a fan-made modding platform for The Elder Scrolls V: Skyrim, turns every character in the game into one you can talk to, with its own memory and voice.

The same update also includes MotionBricks, open-source research from NVIDIA for generating character movement in real time: developers set target poses, and the system fills in the motion between them.

Miyamoto on AI, work and creativity

Finally, a few words from Shigeru Miyamoto, the creator of Mario and Zelda. In comments published by the Japanese magazine Nintendo Dream and translated by GamesBeat, he compared AI to earlier changes in creative tools, from typewriters to word processors to computers.

His point was a distinction he says they have always made: creating something is different from doing the work. The computer assists with the work. The risk, as he put it, is "when you become satisfied with just the work."

He ended on a hopeful note. AI may evolve to the point where it does everything, he said, but he still feels there is plenty left for people to do. As GamesBeat notes, these are English renderings of his Japanese remarks, so the exact wording may differ.

The big picture

Put Wednesday's stories side by side and a pattern shows up: the rules for AI in games are being written right now, and by very different groups.

Engine makers like Epic are deciding what their tools may be used for, and Epic is moving toward letting each studio choose. Stores like Steam are deciding how much to police, and Valve says it prefers better discovery to restricting tools. Inside publishers like EA, managers are setting expectations for how staff should use AI, sometimes without making it official. And at Rockstar, workers are trying to get a formal say over AI policy through a union.

Meanwhile, the technology itself keeps getting smaller and cheaper to run. NVIDIA's new model is built to fit on a gaming PC alongside the game, which could make talking characters more common, especially in mods and smaller games.

For players, most of this is still behind the scenes. But it shapes what ends up on your screen: what games get made and how, which ones you find on a store, and who had a say in how AI was used along the way. Miyamoto's line is a useful one to keep in mind: tools can do more and more of the work, but deciding what's worth making is still a human job.