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Korea’s game studios rebrand as AI tech firms, with stints at fashion, robotics, media

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What was once a world of elves, dragons and power-ups is now giving rise to one of South Korea’s most unexpected tech revolutions, with game studios taking their place alongside Big Tech in the race for AI dominance.

The country’s gaming heavyweights are increasingly shedding their image as pure entertainment companies and positioning themselves as AI-first tech firms, expanding far beyond the virtual battlegrounds into sectors such as fashion, media and even robotics.

Facing a slowing gaming market and rising development costs, game developers and publishers such as NCSOFT Corp., Nexon Co. and Krafton Inc. are leveraging their proprietary AI tools and massive gameplay data troves to build new growth engines, applying gaming-derived machine intelligence to real-world industries.

“We’re no longer just competing for players’ time, but for a stake in the future of applied AI,” said an executive at a domestic game firm.

(Graphics by Daeun Lee)

FROM MMORPGs TO 3D MODELS, FASHION AI

Few illustrate this transition better than NCSOFT, which in February spun off its AI division into a standalone subsidiary, NC AI.

The unit is set to launch Varco 3D at the end of July – a software tool that can generate high-quality 3D characters using nothing more than text or image prompts.

The product will be offered via a software-as-a-service (SaaS) model and targets users far beyond traditional game development, from virtual influencers to digital fashion brands, according to company officials.

The move follows NCSOFT’s development in 2023 of Varco, Korea’s first large language model (LLM) developed by a game company.

The company now provides Varco Art Fashion, an AI-powered tool that generates apparel designs and visual prototypes. The tool has already been adopted by 10 leading fashion firms, halving new product development times, according to NCSOFT.

Throne and Liberty (Courtesy of NCSOFT)
Throne and Liberty (Courtesy of NCSOFT)

“We see an opportunity to disrupt the fashion and content production pipelines using tools originally built for game development,” said an NC AI official.

The company also provides generative engines to media firms, allowing for automatic content production and editing.

PREDICTING THE NEXT BIG HIT, OR MISS

Nexon, which owns game-developing studio Nexon Games Co., is taking a different path: using AI to forecast the commercial success of upcoming games.

At the Nexon Developers Conference (NDC25) last month, the firm unveiled its Game Success Prediction AI, designed to sift through early gameplay patterns and metadata to identify breakout potential.

Krafton is the developer of PlayerUnknown’s Battlegrounds (PUBG)
Krafton is the developer of PlayerUnknown’s Battlegrounds (PUBG)

“Sometimes, high-quality games are overlooked,” said Oh Jin-wook, head of Nexon’s Intelligence Labs Group. “AI can help uncover hidden gems, allowing us to take more creative risks.”

His argument is backed by data.

According to global gaming platform Steam, 84% of titles released on its platform last year failed to even register meaningful sales.

Nexon said AI can help de-risk game development by offering early signals from pre-launch user testing.

TAKING AI INTO THE PHYSICAL REALM

Krafton, best known for PlayerUnknown’s Battlegrounds (PUBG), is taking AI into the physical realm.

Varco is a large language model (LLM) developed by NCSOFT
Varco is a large language model (LLM) developed by NCSOFT

In April, Krafton Chief Executive Kim Changhan met with Nvidia CEO Jensen Huang to discuss collaboration on humanoid robotics, building on their previous partnership to co-develop non-player character AI.

Krafton recently launched a Physical AI team, tasked with adapting in-game character AI for robotic applications. The goal: to use virtual intelligence as the foundation for real-world robotic “brains.”

Unlike software AI such as ChatGPT, physical AI focuses on decision-making for physical tasks such as picking up or moving objects.

ESCAPING THE GAMING RUT

Analysts said at the heart of this AI pivot is a strategic response to a cooling domestic gaming market.

Rising development costs and a lack of global blockbusters have dragged down growth.

According to the Korea Creative Content Agency, the nation’s gaming user rate fell to a record low of 59.9% in 2024.

The threat isn’t just rival games – it’s YouTube, TikTok and other attention-gobbling apps.

Dungeon & Fire Mobile is a title by Nexon
Dungeon & Fire Mobile is a title by Nexon

Nexon Games CEO Park Yong-hyun named non-gaming platforms as the biggest threat to the gaming industry.

According to mobile analytics firm Mobile Index, Koreans spent over 140 minutes a day on YouTube as of March, outpacing daily game playtime by a wide margin.

Experts say Korean game developers are uniquely positioned to scale into the broader AI economy.

The industry has accumulated years of player behavior data and developed highly advanced simulation environments – ideal conditions for training AI.

“Games are structured, interactive ecosystems with clear rules and goals, perfect for developing and testing AI models,” said Wi Jong-hyun, president of the Korea Game Society and a professor at Chung-Ang University. “It’s only natural that these companies are now leading Korea’s AI transition.”

Write to Young-Chong Choi at youngchoi@hankyung.com
In-Soo Nam edited this article.



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AI technology drives sharp rise in synthetic abuse material

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New data reveals over 1,200 AI-generated abuse videos have been discovered so far in 2025, a significant rise from just two during the same period last year.

AI is increasingly being used to produce highly realistic synthetic abuse videos, raising alarm among regulators and industry bodies.

According to new data published by the Internet Watch Foundation (IWF), 1,286 individual AI-generated abuse videos were identified during the first half of 2025, compared to just two in the same period last year.

Instead of remaining crude or glitch-filled, such material now appears so lifelike that under UK law, it must be treated like authentic recordings.

More than 1,000 of the videos fell into Category A, the most serious classification involving depictions of extreme harm. The number of webpages hosting this type of content has also risen sharply.

Derek Ray-Hill, interim chief executive of the IWF, expressed concern that longer-form synthetic abuse films are now inevitable unless binding safeguards around AI development are introduced.

Safeguarding minister Jess Phillips described the figures as ‘utterly horrific’ and confirmed two new laws are being introduced to address both those creating this material and those providing tools or guidance on how to do so.

IWF analysts say video quality has advanced significantly instead of remaining basic or easy to detect. What once involved clumsy manipulation is now alarmingly convincing, complicating efforts to monitor and remove such content.

The IWF encourages the public to report concerning material and share the exact web page where it is located.

Would you like to learn more about AI, tech and digital diplomacy? If so, ask our Diplo chatbot!



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Google Cloud Summit London 2025: Practical AI deployment

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The level to which firms are already using AI varies according to technological maturity, strategic focus, and on an industry by industry basis.

But what’s clear is that from the smallest to the largest businesses, the landscape is already shifting. We’ve spoken about AI agents on the podcast before – the promise of autonomous AI activity – but it’s only now that businesses are beginning to put more faith in these tools.



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AI on the line: How AI is transforming vision inspection technologies

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In an era of tightening global regulations and rising consumer expectations, the F&B industry is increasingly turning to advanced vision inspection technologies. From spotting defects to ensuring compliance, these automated inspection tools are reshaping quality control, enhancing efficiency, reducing waste and boosting safety. FoodBev’s Siân Yates explores how cutting-edge technology is reshaping the industry, one perfectly inspected product at a time.

In the food and beverage industry, traditional quality inspection methods have always relied on human observation – an inherently inconsistent and flawed process. Automated vision inspection systems offer a transformative alternative. By detecting foreign objects, assessing product uniformity and ensuring that only items meeting strict quality criteria reach consumers, these systems significantly enhance operational efficiency and minimise errors.

“As the food industry moves towards more automation, applications are becoming increasingly complex, largely due to the variability in food products,” said Anthony Romeo, product manager at US-based vision solutions company Oxipital AI. This complexity stems from the need for automated systems to adapt to the wide range of textures, sizes and ingredients in food, making precise automation a key challenge.

Stephan Pottel, director of strategy at Zebra Technologies, highlighted the rising demand for intelligent automation: “There’s a growing need for machine vision and 3D solutions, powered by deep learning, to address more complex food and packaging use cases, along with vision-guided robotics for tasks like inspection, conveyor belt picking and sortation workflows”.

Key features of vision inspection

1. Defect detection

Vision inspection systems excel in identifying defects that may go unnoticed by human inspectors. These systems utilise high-resolution cameras and advanced algorithms to detect foreign objects, surface defects, and inconsistencies in size and shape. For example, in the fruit packing industry, vision systems can identify bruised or rotten fruit, ensuring only high-quality products are packaged and shipped.

2. Label verification

These technologies are increasingly used for label verification, ensuring compliance with regulatory standards. Systems can check for correct placement, legibility and adherence to labelling requirements, such as allergen information and expiration dates. Vision is usually deployed for label verification, rather than food surface defects, enhancing compliance and reducing the risk of costly recalls.

3. Product uniformity assessment

Maintaining product uniformity is crucial in the food and beverage sector. Vision inspection systems can assess visual aspects such as size, shape and colour. For instance, a snack manufacturer might use vision inspection to ensure that chips are uniformly shaped and coloured, meeting consumer expectations for quality and appearance.

4. Adaptive manufacturing

Advanced vision systems, particularly those incorporating AI and 3D technology, enable adaptive manufacturing processes. These systems can adjust production parameters in real time based on the visual data they collect. For example, in a bakery, vision systems can monitor the size and shape of pastries as they are produced, allowing adjustments to baking times or temperatures to ensure consistent quality.

Advancements in AI

Recent advancements in AI, automation and 3D technology have greatly enhanced machine vision systems, increasing accuracy and providing realistic visual sensing capabilities. 3D imaging technologies are being used to assess the shape and size of products, ensuring they meet packaging specifications. For instance, in the seafood industry, 3D scanners can evaluate the dimensions of fish fillets, ensuring they are cut to the correct size before packaging. This not only reduces waste but also ensures consistency in product offerings.

What is more, 3D profile sensors improve depth perception and refine quality control, making them indispensable tools in industrial automation. Oxipital AI’s Romeo highlighted the potential of these technologies: “Removing defects before they reach customers is a key first step where vision inspection technology plays a role, but there’s even more data to be leveraged”. By preventing defects from the outset, manufacturers can boost yield and reduce waste.

AI-powered vision inspection systems can also facilitate real-time monitoring of production lines, identifying potential issues before they escalate. This capability allows manufacturers to implement predictive maintenance, reducing downtime and improving overall efficiency.

Zebra Technologies

AI and food safety

Consumer safety remains a top priority in the food and beverage industry. AI plays a crucial role in monitoring and analysing processes in real time, helping manufacturers navigate the complexities of compliance with legal requirements and certification pressures from major retailers.

As Zebra Technologies’ Pottel explained: “AI is ideal for food and beverage products where classification, segmentation, and object and anomaly detection are essential. It is also enhancing asset and inventory visibility, which is crucial for predicting contamination risks and maintaining high safety standards throughout the supply chain.”

“Vision technologies can help check the presentation of food products…offering a quick, repeatable and reliable way to assess the visual aspects of food products like size, shape and colour,” added Neil Gruettner, market manager at Mettler-Toledo Product Inspection.

He continued: “Deployment of this type of AI provides context to support rule-based machine learning and improve human decision-making. It also gives inspection equipment the tools to extract and interpret as much data as possible out of a product, facilitating the evolution and refinement of production processes through the continuous exposure to vast datasets.”

AI-enhanced vision systems also guide robots in handling food products, particularly those that are delicate or irregularly shaped. “AI has proved to be a great method for tackling applications with a high frequency of naturally occurring organic variability, such as food,”Oxipital AI’s Romeo explained, adding that this adaptability ensures gentle and precise handling, particularly important when sorting fresh produce or packaging baked goods.

Fortress Technology uses AI to reduce contamination risks and identify defects. The company’s commercial manager, Jodie Curry, told FoodBev: “Streamlining processes reduces the risk of contamination and ensures consistent quality. Implementing automated technology and digital tools helps identify inefficiencies and boosts responsiveness.”

Fortress Technology

The role of combination inspection systems

The integration of multiple inspection technologies into single systems is another key trend in this space. These systems integrate various inspection technologies, such as X-ray, checkweighing and vision inspection, to provide a comprehensive assessment of food products. By combining these technologies, manufacturers can ensure higher quality control, better detection of defects and more efficient production lines. This trend allows for more accurate and reliable monitoring, helping to reduce waste, improve safety standards and enhance overall product quality.

For its part, Fortress offers combination systems that enable comprehensive and multi-layered inspection. The company is already leveraging its proprietary data software package, Contact 4.0, across its metal detection, X-ray and checkweighing technologies. Contact 4.0 allows processors to review and collect data, securely monitor and oversee the performance of multiple Fortress metal detectors, checkweighers or combination inspection machines connected to the same network.

Oxipital AI

Deep learning and quality control

Deep learning is revolutionising visual inspection by enabling machines to learn from data and recognise previously unseen variations of defect As Zebra Technologies’ Pottel explained: “Deep learning machine vision excels at complex visual inspections, especially where the range of anomalies, defects and spoilage can vary, as is often the case with food.

This technology is vital for automating inspections and ensuring quality. Deep learning optical character recognition (OCR) also improves packaging inspection by ensuring label quality, regulatory compliance and brand protection. It can verify label presence, confirm allergen accuracy and prevent mislabeling.

“The goal is to strengthen quality control by capturing an image and processing it against set quality control parameters,” Mettler-Toledo’s Gruettner pointed out.

Vision systems are increasingly deployed for label verification, ensuring compliance with legislative food labelling requirements. The Mettler-Toledo label inspection portfolio features Smart Camera systems (V11, V13, V15) for basic label inspections, including barcodes, alphanumeric text and label quality. For more advanced applications, the PC based V31 and V33 systems offer a larger field of view, faster throughput and enhanced inspection capabilities.

Oxipital AI uses 3D product scans and synthetic data generation to eliminate the need for hand-labelling images. “All training is done at Oxipital AI, enabling food and beverage customers to deploy AI without needing a team of experts,” said Romeo. “Our solutions are designed for immediate impact, requiring no coding, DIY or machine-learning expertise to implement and maintain.”

Mettler-Toledo

Real-world applications and future prospects

According to Zebra’s Global Manufacturing Vision Study, which surveyed leaders across various manufacturing sectors, including F&B, 66% of respondents plan to implement machine vision within the next five years, while 54% expect AI to drive growth by 2029.

These figures, coupled with the expanding market for vision inspection systems, suggest

that the majority of manufacturing leaders are prioritising the integration of these advanced technologies, seeing them as crucial tools for both immediate improvements and long-term growth.

This shift is partly driven by increasingly stringent government regulations, which demand more accurate labelling and packaging. Many companies are already successfully leveraging AI to enhance their operations, particularly in labelling processes.

Despite its clear advantages, the uptake of AI has been slow. The main barrier appears to be cost. While the initial integration can be expensive, AI has demonstrated significant long-term cost savings, making it a worthwhile investment over time.

Zebra’s studies have shown that the pressure to maintain quality while managing fewer resources is intensifying for manufacturers. As a result, cost remains a significant consideration when implementing AI solutions.

Fortress recommends consolidating AI systems into a single interface, which helps reduce costs in the long term. Curry told FoodBev: “The future of our food supply chain depends on advanced inspection systems that enhance food safety, reduce product waste and require minimal factory floor space”.

She continued: “Combination systems offer the benefit of space efficiency, as all sales, services, parts and technical support are handled by one provider. A single interface simplifies training, improves operational safety and drives cost savings through faster installation and reduced training time.”

As AI continues to evolve, its role in vision and inspection is set to expand. Advancements in machine learning, sensor technology and robotics will lead to even more sophisticated and efficient inspection systems, raising quality and safety standards for consumers worldwide.



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