Stocks of various video game companies fell after Google launched a new AI project.
While some AI proponents believe that AI will replace human experience in art, many critics believe that despite creating sophisticated images, similarities in plot/tone/detail often tend to disappear after a minute or two.
But some began to worry after Google announced a new Project Genie, which the company claimed would allow users to create their own playable worlds.
What is Project Genie?
Google announced the new tool earlier this week, revealing that it will allow users to create their own playable worlds.
Users can generate their own worlds by typing prompts or uploading images. Not only can you create your own playable character this way, but you can also create other properties, such as how your character moves and whether the world is explored in first or third person.
How has this affected video game companies?
Well, not great.
The stock prices of many video game companies have fallen in recent days after some people shared their AI creations (including the use of copyrighted characters already designed by established video game companies).
CD Project, the developer of games such as “The Witcher” and “Cyberpunk,” fell about 2%, and Nintendo fell about 6%.
Roblox and TakeTwo Interactive (Rockstar Games’ parent company) also fell significantly just before the latter became profitable, with many anticipating an update for Grand Theft Auto 6, while Unity, powered by the storied game engine, fell a hefty 35%.
Have any game companies responded?
Unity, which saw the biggest decline in its stock price, actually responded that it intended to work with AI-generated content, rather than against it.
“Advances in large-scale ‘world models’, whether developed by partners like Google or not, have significantly expanded the frontiers of interactive content creation,” said Unity CEO Matthew Bromberg. “These models can generate high-quality, interactive, video-like experiences from natural language or minimal input.
“Rather than seeing this as a risk, we see it as a powerful accelerator. Video-based generation is exactly the type of input that our Agentic AI workflow is designed to leverage, transforming rich visual output into initial game scenes that can then be refined with the deterministic systems used by Unity developers today.”
“Our agents are already generating high-quality scenes from still videos. Interactive, camera-controllable video from world models will further enhance this pipeline and significantly increase the fidelity and speed of early-stage content creation. We believe this is a meaningful step forward for AI-driven development across the industry.”
Will this be the end of video games as we know them?
Probably not.
While AI has significant limitations that prevent many people from making the kind of AAA games they play on PS5/XBOX/Switch, William Blair analyst Dylan Becker said concerns that AI will “replace” video game development/reduce the need for developers are “over the top”.
“We believe the movement we’re seeing in gaming stocks today significantly downplays the importance of creativity and social/network effects in open world games,” Becker told Bloomberg.
Morgan Stanley Bank added that there are two scenarios in this “AI replaces video games” scenario. Either game companies will integrate AI tools into their existing engines (a sentiment echoed previously by Unity CEO Matthew Bromberg), or the model will replace current technology.
The bank argued that current restrictions make the second scenario much less likely.
Analysts at the bank argued that while world models such as Genie can already generate “playable video game-like worlds”, they have structural limitations, while the key problems of “replacement” include “determinism, memory, and updating” that are difficult to solve.
