Gaming

Level-5 Repaired Its Trailers While Japan's Studios Kept Building With AI

By Omar aka Crypt0 · Sep 17, 2026

Two AI stories collided in gaming this week, and they point in opposite directions. Level-5 spent the week repairing trailers after fans spotted AI assisted visuals in its VISION 2026 II: Dreams showcase. Meanwhile a new industry survey found that essentially every Japanese online game studio already uses generative AI in production. Same technology, two cultures, one industry figuring out its norms in real time.

The Level-5 saga moved fast. CEO Akihiro Hino apologized on September 12 after viewers flagged AI generated elements in showcase footage for Yo-kai Watch 2: Haunted Domain, Inazuma Eleven: Cross, Inazuma Eleven Revolution of Fire, DECAPOLICE, and Fantasy Life i: The Girl Who Steals Time. Then came the September 16 plot twist on Level-5's website: some of the oddest visuals, including bizarre telephone poles and misshapen vending machines and rain gutters in the Yo-kai Watch 2 trailer, were human error rather than machine output. The telephone poles, the studio explained, were modeled on reference photos of real Japanese electrical wires, which genuinely look that strange.

Level-5 reissued a corrected version of the trailer with cleaned up background art and promised fully updated trailers at the Tokyo Game Show. The earlier cut that aired in the September 9 Nintendo Direct stays as a time capsule: Direct deadlines forced the studio to submit trailers before the VISION showcase, so the Direct carried the earlier version. Going forward, the studio says it will keep AI tools on efficiency work and out of fan facing videos. Hino's longer view, stated last year, still stands: treating AI as evil could seriously hinder the advancement of modern digital technology.

Now the survey. JOGA 2026, the annual report on Japan's online gaming market, found that 100 percent of surveyed studios building online titles already use generative AI. Gemini leads at 94 percent adoption, followed by Claude at 84 percent and GitHub Copilot at 76 percent. The surprise is where the tools land: the leading uses are studying player preferences and predicting user behavior, with art and narrative generation trailing far behind. Players still voice unease, concentrated on two worries: games that could infringe copyrights and an industry converging on lookalike titles.

The cultural split is the real story. Niko Partners director Daniel Ahmad notes adoption is extremely high across Japan, Korea, and China, where audiences show far greater acceptance of AI driven features; an AI companion guiding players through a game delights many Asian players while it alarms many Western ones. Tencent's recent slate shows the integration depth: AI assistants for Valorant Mobile and Path of Exile 2, neural dynamic global illumination for developers, an office workflow agent called WorkBuddy, and AI supported user generated content tools for Peacekeeper Elite. In the West, Microsoft's Muse game generation tech met open rejection and the Larian Divinity dispute forced the studio to revise its plans, even as Capcom, Sony, Krafton, and Square Enix all list AI tools among their ambitions for upcoming projects.

The divide is really about trust, and trust gets built through honesty. Studios that say plainly where the machine helped and where human hands did the work will earn the benefit of the doubt. Players everywhere want the same thing: games made with care, whatever tools helped shape them.

Sources

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