In ten years, when a bunch of people are using AI to build shoddy asset flips, I imagine Nintendo will still be churning out blockbusters that sell millions using deliberate design decisions featuring timeless art direction.

Agreed. Still, a useful tool and it'll be interesting to see how things progress in the coming years. The more menial tasks that can be assisted/eliminated, the better; More time spent on things that actually matter. My experience with generative AI is limited - I primarily use it to add rendering to hand-drawn designs, given that I'm slow as shit in 2D, and as a random idea generator within existing contexts. It already excels at that.

on the flip side we have games like Bodycam, made by two guys, one of whom was 17 at the time when they started, and it looks more realistic than any AAA shooter and most people are none the wiser to how it was made

Missed your edit. I think selling games on graphics will become less viable in subsequent generations, and as more and more "generic" looking titles release on the back of easy access to photogrammetry/asset libraries, gamers will likely become less forgiving of them. That's not to take anything away from Bodycam. Execution counts for more than most things, they did an excellent job and deserve every bit of success. Palworld is another interesting example.

It's possible to get creative, push boundaries and make use of these tools to build out fascinating, unique, or groundbreaking games using these tools and techniques, but as you stated, most studios do not do this.

I left AAA before the activism got out of hand, but not before it became a joyless, bureaucratic slog. AAA is too rigid, and more understandably, less willing to commit to untried approaches given the disproportionate cost of failure. The indie scene is a great incubator for new ideas and approaches. AA adopting the battle tested ones strikes me as the best of both worlds.