Check out this awesome video featuring 2D images of an anime girl transformed into a live 3D avatar! So how does this work in games?
To take advantage of modern 3D hardware acceleration, many two-dimensional games are actually rendered in 3D using an orthogonal camera and textured quads — flat rectangles with an image on top. Live2D, from Japanese company Cybernoids, takes this process a step further by allowing artists to use 2D images — say from anime — and transform them into 3D recreations.
Live2D is currently seeing most use in gaming, though the technology is at its strongest when not a great deal of movement is required. Cybernoids hopes to extend the tech to encompass more advanced motion within the next few years. I expect so much potential to come from this technology. Just imagine the possibilities this technology will bring!