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PlayStation Will Use AI and Machine Learning to Speed up Game Development
(insider-gaming.com)
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That's definitely one of the ways it's going to be applied.
The bigger challenge is union negotiations around voice synthesis for those lines, but that will eventually get sorted out.
It won't be dynamic, unless live service, but you'll have significantly more fleshed out NPCs by the next generation of open world games (around 5-6 years from now).
Earlier than that will be somewhat enhanced, but not built from the ground up with it in mind the way the next generation will be.