Imperial College London has created a computer program that can design, test and develop its own videogames from scratch. Angelina, an AI commissioned by New Scientist magazine, is capable of procedurally generating games, thoroughly testing them at each stage and working out a "fun" quotient (seriously) to ensure that the final product will be enjoyable. Using 'computational evolution,' Angelina kills off 'bad' game designs and combines good ones together - with the end result being a surprisingly impressive little platformer called Space Station Invaders. You can play it over at New Scientist.
The implications are enormous - not as a replacement for human developers, but as a development tool that can assist indie outfits with quality assurance and suggesting new gameplay avenues that they haven't yet considered. Not to mention that it's an astounding feat of software engineering. Just in case, though, let me be the first to welcome our new AI overlords. More details here.