I'm not sure I really buy the argument that this could be better for several reasons.

1. The implicit guardrails these companies are going to add which will complicate things.

2. Numerous game-breaking states because you're risking a more traditional Dungeons & Dragons Dungeon Master problem where your party somehow has failed to ask an NPC the right kind of questions or even consider that they might have information relevant to the campaign. How do you get this information across if the player isn't somehow prompted to attempt it?

3. Baldur's Gate 3 only came out about 4 months before this article. It exists as a counterpoint to the idea that pre-scripted dialogue can reduce replayability. Only if you approach it like Bethesda and you refuse to block your players off from content. I don't think Todd Howard realizes how that philosophy hurts replayability because you can always complete every questline every playthrough. While in a game like BG3, large amounts of the game are locked off based on your character, class, party and choices you make. Certain things you have to replay the whole game to access. There's mountains of replayability in their world of pre-scripted dialogue. It's rather no other company has been willing to put the kind of time, money, effort, and production quality that something like BG3 demands.

I think this AI stuff is a cheap cop-out that uses way too much energy for a weak result. Instead of making better games the system spec requirements will either become insane or all games will be delivered via streaming platforms. They've maxed out graphical fidelity but still need excuses to use "better" hardware. Better game design achieves the same result without the vendor lock-in and absurd hardware/power demands.