There are few issues in the games industry right now that are as divisive as generative AI.

Some see it as a way to make games more quickly and explore new possibilities, while others point to its unreliability and sometimes dubious ethical and legal status, not to mention the threat it places on jobs as well as the craft of making games more generally. Just this week, Epic Games CEO Tim Sweeney waded into the argument over the use of AI voice generation in Arc Raiders, a technology that has had game actors up in arms (and out on strike).

But whereas arguments are still raging over the use of AI in the PC and console space, the mobile games industry has been quietly embracing the technology for years now.

The relative acceptance of AI in the mobile space might be partly because mobile games are aimed at a more casual audience. “They care about a great gaming experience – maybe not about how it was created so much,” says Hendrik Klindworth, chairman of the Hamburg-based mobile developer InnoGames, which is behind evergreen free-to-play games like Tribal Wars and Forge of Empires.

“We are positive about the opportunities of AI,” says Klindworth. “We use it to make games that we could not [have] created before. And I think this is great for us, and it’s great for the players.” However, he emphasises that people are always involved in the process. “The taste, the quality – this is done by humans.”

Rather than replacing workers with AI tools, as King was alleged to have done earlier this year, InnoGames plans to use AI to create more content with the same number of employees. “We think it makes sense to use AI tools to just get more great stuff for our players,” says Klindworth. “We are a smaller company [than King], so we always lack the internal resources to do all the stuff – and that’s why we think AI can help us to do all the things we actually want to do.”

He’s particularly thinking about how AI can help with live-ops within games, in terms of keeping free-to-play audiences happy with an endless stream of new content. “So creating new eras for games like Forge of Empires, Elvenar, Heroes of History, Rise of Cultures, things like this. What we see is that compared to market leaders, there’s still the potential to get more content for the players, and I think we can nowadays achieve more with the same teams.”

Whereas there are numerous examples of backlash against AI from PC and console players – such as the storm caused by The Alters using AI-generated localization, as well as Frontier Developments being pressured to remove AI-generated portraits from Jurassic World Evolution 3 – we see relatively few instances of AI outrage in the mobile space.

“I think in the free-to-play world, it’s not so much of a topic,” says Klindworth. “The most important thing is, of course, if players immediately see that your content is created by an AI, then you most likely have done something wrong. We clearly use AI, we are very AI positive, but there is an artist that at the end owns the result, and uses AI to create content and [makes] changes until the artist themselves believes this is really the quality that we want to get out there. So it’s the artist that is in charge of the game quality, not AI.”

But given the backlash against AI in many parts of the art world, how do InnoGames’ artists feel about the process?

“I think in general, positive,” replies Klindworth. “We have artists that say ‘with the help of AI, I can create nowadays things that were not really possible before.’ […] They use AI, but they still have to do a lot of work to make it really great, so it’s not fully AI generated. It’s more like supporting the creative process. So I think it’s overall a very positive reaction.

“We are also very clear we want to have artists that are open about this, that are willing to try out new opportunities and use a tool to create cool stuff.”

InnoGames has also been using AI on the engineering side of development. “This year, agentic coding systems reached a level where they really help you to get more, good quality stuff done,” says Klindworth. “In the years before, it was always a bit small, it was not a game changer. Maybe even a bit over-hyped. But I think now we are in a phase where it’s starting to become reality.”

Two decades on

Klindworth has been with InnoGames since the very beginning. He began working on the browser-based MMO Tribal Wars as a hobby project in 2003, alongside his brother Eike and friend Michael Zillmer. When the game blew up, the three of them switched to focusing on it full time, forming InnoGames. The arrival of smartphones offered even greater opportunities for the new company. “It was very early days, so it was really like a blue ocean market situation,” recalls Klindworth. “For us, it was also important that we could prove that we are more than just the Tribal Wars company.”

InnoGames has had plenty more successes since then: earlier this year, the company announced that it had surpassed €2 billion ($2.3 billion) in lifetime revenue, with Forge of Empires accounting for half of that total, while Tribal Wars, Grepolis, and Elvenar each contributed more than €200 million ($232 million). In fact, despite being more than two decades old, Tribal Wars has just had its best ever year in terms of revenue, according to Klindworth.

But that success generates its own problems. Any new title released by InnoGames might now find itself undermining and drawing players from its existing games. And unlike the blue ocean days of InnoGames’ beginning, the saturated mobile market is now very much in a red ocean phase, in which companies compete with ever-higher marketing spend to lure each others’ players, and in which success can be elusive.

“Entering the mobile gaming space is much harder nowadays,” Klindworth muses. “The level of sophistication in different areas is higher, the financial burdens are getting higher. There are still examples out there where it works, but year by year I think it’s getting more challenging.”

But that hasn’t stopped InnoGames from trying to launch new titles. “I think it is necessary as a company to create new games,” says Klindworth. “I mean, it’s great if you have something like Tribal Wars growing year by year, but you can’t always rely on this.”

Like many mobile game companies, InnoGames tries to get prototypes for new games into the hands of players as soon as possible for early feedback. “We do some planning, we do some market research, but in the end, it’s the players that decide if a game is fun or not,” says Klindworth. And if the feedback isn’t good enough, development is stopped in its tracks – Klindworth says that more than 50% of the games the company has started have been cancelled before completion.

This is de rigueur for the mobile world, where the rewards for a successful, evergreen title can be enormous, but the road to that success is littered with the bodies of games that didn’t make it. Even if a game makes it to launch, it still might not stick: InnoGames has discontinued nearly a dozen browser and mobile games down the years. “Everyone knows that this is part of the market,” says Klindworth. “Everyone wants to make a really great game, and everyone also knows that even if a game does not work out, it doesn’t say something about the team’s quality. This is just life in today’s environment.”

Another chance

We’re sadly used to seeing publishers shutter studios after even a single failure, but Klindworth takes a different view. “Even great teams quite often need several approaches to make a successful game,” he says. “But we believe it makes sense to keep the teams together and let them think about a new idea, a new pivot to something else. And this has worked for us.” He notes that teams which failed the first or second time around can often see success on another swing of the bat.

Of course, mobile teams, even for major games, tend to be much smaller than the development staff for the biggest console and PC titles. Instead, the chief outlay is for marketing, which Klindworth says is by far the biggest part of InnoGames’ cost base.

He’s been glad to see a decline in the trend in mobile marketing of advertisements that bore very little resemblance to the games they were promoting. “I think it’s better for the market overall,” he says, noting that InnoGames has seen success with adverts that represent the game faithfully. “The players just stay with your game because you’re being more honest with the advertising.”

InnoGames has seen big success with strategy titles like Forge of Empires and Heroes of History – the latter, one of a number of city builders InnoGames has created down the years, launched around a year ago and has already become the company’s second biggest title. “It proves it is possible even in this market environment to launch new games,” says Klindworth.

But the company’s latest game, Cozy Coast, is a distinct departure from InnoGames’ biggest titles. It’s firmly aimed at the casual audience, featuring the popular ‘merge-2’ puzzle mechanic, whereby items are merged together to form new, different items in order to create a particular outcome.

It’s a tough market out there, with plateauing growth in mobile in particular, and in difficult times like these we often see companies become defensive, doubling down on the things they know best rather than experimenting with something new. But Klindworth thinks there should be a mix.

“I think it’s right to have games that are playing to your core strengths, and then add something fresh or something new on top of this.” He gives the example of Heroes of History. “We used a lot of the city-building mechanics we had already experienced with Forge of Empires, Elvenar, Rise of Cultures, so this was something we have built a lot of experience in over the years. But then we combined it with hero mechanics, which was something new for us.”

He adds that InnoGames has been helped by being part of the Stockholm-headquartered Modern Times Group (MTG), which took a majority stake in the firm in 2017. Since our conversation, Klindworth has moved from CEO of InnoGames to chairman of the board at MTG as well as becoming executive chairman of the newly created MTG Midcore District, a cluster of five MTG-owned firms including InnoGames and Plarium.

Plarium created the hero-focused RPG Raid: Shadow Legends, and Klindworth says that knowledge sharing between Plarium and InnoGames was “very beneficial” for the creation of Heroes of History.

In addition to encouraging knowledge sharing, Klindworth believes it’s important to give development teams autonomy. “It makes sense to be structured as a company around the games, so the game teams themselves can find the best setup and the best way to approach things. Because things that are working in Forge of Empires will not automatically work in Cozy Coast. And also Tribal Wars is clearly a different game from Forge of Empires: there are some similarities, but there are also different kinds of audiences, different kinds of gameplay. So that’s why it makes sense to have game teams that are really deep into their games.”

With several long-running and still successful games under its belt, it appears that InnoGames is doing quite nicely right now – but at the same time, Klindworth is all too aware that the days of double-digit games market growth are behind us, and the focus is now on sustainability. “I wouldn’t expect explosive growth in the games industry in general, especially from the hiring perspective,” he says. “Rather, companies will look at how much more can we do with our existing teams – how much more content can we create there?”

Will AI provide the productivity boost so many CEOs crave? Only time will tell. But Klindworth is certain that mobile firms need to adapt to meet the challenges of a red ocean market.

“There’s no room for inefficiency any more. So it means you just need to look at everything you’re doing and always question yourself, and also challenge yourself – how can we make this even better?”