then about 6 months in people start noticing that every game looks exactly the same
Do we play games for novel look and sound or novel experience or novel story? The answer is "All of the above."
My belief is that in order to communicate my intuition about this it helps to provide discrete steps which explain the transition.
Then, with infinite variations, there will be infinite duds. People will value the ones that aren't duds so there will be a market for curators. And there will be a niche where people will want to see the exact same output together and talk about it.
Can you imagine facebook ? "Facebook, please give me a friend that <prompt here>"
In a way it's the death of imagination because the search space is limited to what has come before. Granted, large portions of the game industry have already given up on making anything really new.
So you're working in a games development studio as a visual artist.
At first you're producing renderings in Blender or whatever.
Then, AI is able to generate three-dimensional meshes for you. You are in the loop, deciding that these meshes are suitable, which textures work, which are the best, designing the prompts, etc. This is 3D midjourney.
At this point, you're now able to produce far more more quickly and it's likely that fewer artists are required within your company.
Later, AI is able to more accurately decide which models will be preferred by the higher ups, or by the playerbase, better than you are as an artist. The AI has now replaced you as an artist. The software team or management simply ask the AI - "please produce me a set of fantasy character models for my game, with these characteristics". This is essentially GPT mixed with 3D midjourney.
I'd say we're not far off, currently, from this point.
Beyond that, perhaps the AI is then able to produce game rules, visual imagery, game engines etc than your company. The prompt "produce a doom clone with portals" results in a higher quality product than a team of humans working on it.
We don't quite have that yet.
Beyond that, the AI may be able to determine which games will be valued by the market and thus what is worth spending effort on. It could end up outcompeting all game studios.
Move further and it may produce something which just up-ends the game industry entirely by producing a product which gamers prefer to spend their time on.
I don't think that people quite grok the idea of what human-level or beyond AI actually is. By definition superhuman AI is more able than you are. The question is whether we will actually end up with it; that it will outcompete us if we create it is tautological.