Gaming

I think the forseeable future will give us a hybrid solution where a writing team creates most of the content (dialogue for the main story and important side quests, character backstory, distinctive mannerisms) and AI fills in the rest.

One of the main problems with branching narratives is that it makes writing and recording dialogue very expensive. The upcoming Baldur's Gate 3 has something like 170 hours of cutscenes and players will see less than 10% in a single playthrough. Not to mention hundreds of thousands of dialogue lines. Developers have to find techniques to reuse as much as possible which leads to situations where the ending consists of a loosely connected list of applicable scene snippets. Now imagine that AI can fill in the gaps between those snippets to make them seem like a single continuous sequence.

AI can also fill in events that the developers could never anticipate. Imagine you killing a random blacksmith in Skyrim. With current technology, NPCs would either not react at all or give a generic "killing innocents is bad". How awesome would it be if the game would automatically generate a prompt from the basic facts: npc refuses to give discount, player kills npc, npc was blacksmith, player steals dead npc's wares, wares are needed for sidequest, ... and then use that to provide not only companion dialogue but also possible replies for the player. If this happens multiple times, maybe the companion will mention it in other situations or confront the player when they're alone. Imagine if during a long walk through the wilderness, your companions start talking about what happened during the last few days.

With a fully AI-generated character, this would all become very generic and unnatural but if every character can extrapolate from a few hundred handwritten lines to match their tone, this could actually work.