NVIDIA did something similar with GANs in 2020 [1], except users could actually play those games (unlike in this diffusion work which just plays back simulated video). Sentdex later adapted this to play GTA with a really cool demo [2].

[1] https://research.nvidia.com/labs/toronto-ai/gameGAN/

[2] https://www.youtube.com/watch?v=udPY5rQVoW0