Steam hosts a third-party AI gaming festival: What it reveals about Game Dev
Artificial intelligence in games has a labeling problem, and it starts with the word itself.
For a lot of players, "AI-generated game" conjures a specific image: synthetic artwork, generated voices, assets spat out from a text prompt. For developers, though, AI usually means something much less visible: a coding assistant suggesting a C# function, a tool hunting for bugs, an automated localization pass, a prototype thrown together faster with an LLM's help, or a system generating NPC dialogue on the fly while the game is running.
Steam's AI Gaming Festival, running from September 7 through September 28, 2026, puts all of that under one roof. It's worth noting up front that despite looking like a Steam sale event, it's actually organized through a third-party Steam Curator page rather than being one of Valve's own festivals. SteamDB currently has it tracked at roughly 100 participating products.
That distinction matters, because the festival is quietly making an argument about what should count as "AI in gaming." And its answer, more or less, is: almost everything.
One Label, Twelve Very Different Uses
The festival sorts its titles into 12 reported categories of AI use: artwork, asset creation, programming, NPC behavior, player-input interactions, story and lore, localization, voices, music, sound effects, testing and debugging, and marketing.
On paper, that's a far more useful approach than slapping a generic "AI" badge on a storefront page. In practice, it also shows just how stretched the term has become.
Take Backpack Dungeon, for instance. Its Steam disclosure notes that some of the pixel-art item icons and monster sprites were made with AI assistance: a direct, player-facing use where you actually see the output while you play. Now compare that to a developer who used an AI coding assistant to knock out boilerplate, chase down a broken script, or scaffold a UI. The finished game might not contain a single piece of generated artwork, dialogue, or music.
Both of those count as "using generative AI." But from where the player is sitting, they couldn't be more different.
This is really what makes the festival more interesting than the usual back-and-forth over whether generated artwork belongs in commercial games. Its own categories quietly admit that AI has worked its way into every stage of production, from things audiences directly see and hear, to tools they'll never know were even involved. Calling all of that simply "AI games" is a bit like calling every procedurally built title a "procedural game." It tells you something about how the game was made, but almost nothing about what you're actually getting.
AI as Content vs. AI as Infrastructure
Valve already draws something like this line itself. Steam's Content Survey specifically targets generative AI used to produce material that ships with the game and gets consumed by players — artwork, audio, narrative, localization — and splits it further into pre-generated content (made during development) and live-generated content (created on the fly while the game runs). For that second category, developers also have to explain what safeguards stop the system from generating illegal content.
Efficiency gains from AI-powered dev tools aren't the focus of that section at all, and it's telling that Valve leaves them out.
So there's a real divide here. If a studio generates character portraits that ship with the final game, players can reasonably expect a disclosure. If that same studio just asked an LLM to explain a cryptic error message or refactor an internal tool, players may never see anything the model touched.
The AI Gaming Festival lumps both of those into one broad taxonomy of "AI development." Valve's own disclosure rules don't treat them as equivalent, and that's less a loophole than a symptom of how hard meaningful disclosure gets once AI is baked into ordinary dev tooling.
Should a studio disclose that Copilot suggested ten lines of code? What if an LLM wrote half a prototype that got rewritten by hand afterward? Does AI-assisted testing make something an "AI game"? What about the marketing copy? At some point a label meant to inform buyers turns into a running log of everything that happened during development, which isn't useful to anyone.
When the AI Is the Game
Then there's a third category, one that doesn't fit either bucket: games where AI isn't a production tool at all, but the actual point of the product.
AI Pals Engine is a clean example. Released into Early Access back in January, it's desktop software built around locally run AI, customizable characters, and text-based interactions; offline, generative, nothing scripted in the traditional sense. Strip the AI out of that and you don't just change how it was made. You change what it is.
So you end up with three very different situations sitting side by side in the same festival: a roguelike with a handful of AI-assisted sprites, a game whose NPCs generate their responses live, and a title where the developers just used an LLM to squash bugs. One's an asset-production technique. One's a runtime mechanic. One's a dev utility. Treating all three as the same thing makes the whole conversation about "AI adoption" a lot less useful than it should be.
Worse, there is a hidden cost for the developers that opt into these broad, confusing disclosures; being listed in as a participant of an "AI festival" instantly puts you onto community blocklists and boycott trackers, even if the developer only used an LLM to debug a script.
The Real Issue Is Information, Not Disclosure
Much of the fight over generative AI in games comes down to legitimate concerns: copyright, consent, training data, jobs, creative authorship. None of that goes away just because a developer calls AI "a tool." But the reverse holds too: saying AI was involved somewhere tells you surprisingly little about how much creative control actually got handed over to it.
Picture two workflows. In one, a developer types a short prompt, accepts the image more or less as-is, and drops it straight into the game. In the other, an artist runs generative tools through a tightly controlled pipeline; composition references, structural guides, iterative masking, generated variations, then hours of manual repainting on top. Both could technically be labeled "AI-assisted artwork." The amount of actual human authorship behind them is nowhere close to the same.
That's why more precise disclosure would probably do more good than broader disclosure. Players who want to avoid generated assets should be able to find them easily. Players specifically wary of synthetic voices should be able to spot those too. A game built around live generative dialogue owes players an explanation of what happens when the model gets it wrong. And a studio that used an AI tool to track down one bug probably shouldn't be lumped in creatively with a studio whose entire visual identity came out of a model.
Disclosure only works when it's specific enough to actually inform a decision.
The Conference Might Matter More Than the Sale
The festival also comes paired with an online educational track hosted through Glitch: 22 sessions covering things like model selection, distribution, playtesting, analytics, and practical AI research. That side of it might end up being more valuable than the storefront.
One session focuses on evaluating language models for game development rather than chasing benchmarks or hype. Another features Dr. Luke Dicken, formerly Head of AI at Take-Two Interactive, talking about what actual industry R&D looks like once you get past the current wave of buzzwords. Glitch notes he's spent years on AI and innovation work at places like Zynga and Take-Two.
None of that proves every generative technique has suddenly become industry standard. What it does show is more modest, and arguably more important: AI isn't just an experimental shortcut for solo devs generating cheap assets anymore. Big studios are treating this as a genuine research and production question.
Which means the useful conversation isn't really "will games use AI" anymore. It's where, how, and how much.
A Festival That Accidentally Proves Its Own Point
The AI Gaming Festival's taxonomy isn't perfect, honestly, its sheer breadth risks recreating the exact confusion it set out to fix. Once programming help, generated artwork, localization, dynamic NPCs, testing, and marketing all sit under one headline, "AI game" stretches until it barely means anything.
Using a 12-category labelling system with self-reporting and unverified curation instantly degrades the attempt at clarity into a mess. The system is only as good as the moderation enforcing it.
But that might be the event's most useful side effect. It makes the case, almost by accident, for why conversations about AI in games need to get a lot more specific. There's no single "AI pipeline"; there's a scattered set of technologies showing up at different points in production, sometimes replacing work, sometimes just speeding it up, sometimes creating genuinely new mechanics, and sometimes doing nothing more than helping a programmer spot a typo faster. Those differences matter creatively, legally, and, increasingly, to the people buying the games.
The disclosure standard that actually helps people probably isn't a giant warning label slapped on anything machine learning ever touched. It looks more like a nutrition label: what was used, where, what it produced, and whether players ever encounter that output directly. And one bigger question is who could actually enforce such a nutrition label in a realistic way, since it is impossible to know whether a C# script was written by an LLM or by human hands.
The other side of the coin is that players are encouraged to learn that AI usage doesn't automatically mean AI slop, especially when it comes to long, highly technical yet creative endeavors like game development , so a more precise labelling isn't met with needless backlash.
The AI Gaming Festival is an ambitious first attempt at fixing this bridge. And maybe that's the more useful question it leaves behind, not "was AI used?" but "will this AI usage ruin this game's experience?"
See more about the festival in the following links:
