Morgan Stanley analysts seem to think so, too. As Reuters reported on Wednesday (April 22), Wall Street brokerages claim advanced AI tools could cut game development costs by almost half. And that could generate about $22 billion a year in profits for game makers.
Analysts say using AI to automate tasks such as building game environments, generating dialogue, and testing software could reduce production schedules and costs, potentially increasing profit margins over time.
Morgan Stanley predicts that global consumer spending on video games will total $275 billion this year, of which approximately 20% will be reinvested in game development and operations.
The Reuters report cited the eight-year gap between games in the popular Grand Theft Auto series, pointing out that game development is expensive and labor intensive.
Morgan Stanley says that while AI has the potential to streamline game development by enabling smaller teams and faster post-release improvements, not all gaming companies will see the same level of benefits.
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“We believe value is concentrated in large platforms and discovery, especially among companies with proprietary data, IP and live operations,” the brokerage said. “The biggest beneficiaries may be those who control distribution, data, and engagement.”
As we covered here earlier this year, advances in AI have already sparked some debate about how the technology will impact the gaming world.
This comes after the debut of Project Genie, Google’s AI prototype that allows users to generate interactive virtual 3D worlds by entering text prompts or uploading images.
“The system can create environments, characters, and basic interactions to create short playable experiences that demonstrate how AI can automate elements of worldbuilding and game design,” PYMNTS writes.
The release caused several gaming stocks, including Roblox, to plummet and sparked debate among analysts about the impact of the tool. For example, mBank analysts said the technology is eye-catching but limited in its current form, while others see the technology as complementary to video game companies’ existing efforts.
“Project Genie reflects a broader trend in AI research toward systems that move beyond static content generation to interactive, real-time experiences,” the report added.
“Although Google has not said when or if the prototype will be commercialized, the tool has amplified questions about how quickly generative AI can move from experimental demos to production-ready systems.”
