  In this paper, we present "1001 Nights", an AI-native game that allows
players lead in-game reality through co-created storytelling with the character
driven by large language model. The concept is inspired by Wittgenstein's idea
of the limits of one's world being determined by the bounds of their language.
Using advanced AI tools like GPT-4 and Stable Diffusion, the second iteration
of the game enables the protagonist, Shahrzad, to realize words and stories in
her world. The player can steer the conversation with the AI King towards
specific keywords, which then become battle equipment in the game. This blend
of interactive narrative and text-to-image transformation challenges the
conventional border between the game world and reality through a dual
perspective. We focus on Shahrzad, who seeks to alter her fate compared to the
original folklore, and the player, who collaborates with AI to craft narratives
and shape the game world. We explore the technical and design elements of
implementing such a game with an objective to enhance the narrative game genre
with AI-generated content and to delve into AI-native gameplay possibilities.
