It seems absurd, but not so much when you start looking at the implications of applying AI like this to every part of the development pipeline. Especially if the capability is eventually packaged up into commercial programs or integrated with existing engines.
Creating a detailed character model no longer will require a world-class artist working in ZBrush, but simply choosing a few images and asking the AI to interpolate, with the artist input simply being to weight certain areas by hand so as to update the [ML] model.
There's already work on AI-based procedural animation systems. I'm sure AI rigging isn't far off either, if it doesn't already exist.
Procedural worlds are due for a quantum leap in my opinion, far beyond what current state of the art is.
Eventually voice actors are going to be obsolete as well. The current state of the art in speech synthesis has demonstrated it's basically possible now using existing principles, it just needs a lot of refinement.
The hardest problem I can foresee is probably the automated creation of story, including NPC dialog and interactions. That's almost AGI-level hard, but it too is probably solvable by just evolving existing techniques.
People are going to be able to create their own version of The Matrix soon, and it won't require a $500M budget, let alone a $500k budget.