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You've just described why every SaaS stock has taken a beating in the last 6 months.

How long until this thing is good enough to clone photoshop? Or Skyrim? I think all bets are off for the software world.

Automatic QA/testing becomes the main challenge, so probably a ways off. How do you "specify" Skyrim?

There are lots of playthroughs on YouTube, I would expect at some point you can ask it to watch them and the “generate a game like that”.