Shares of videogame companies fell sharply in afternoon trading on Friday after Alphabet's Google rolled out its artificial intelligence model capable of creating interactive digital worlds with…
By Zaheer Kachwala
Jan 30 (Reuters) - Shares of videogame companies fell sharply in afternoon trading on Friday after Alphabet's Google rolled out its artificial intelligence model capable of creating interactive digital worlds with simple prompts.
Shares of "Grand Theft Auto" maker Take-Two Interactive fell 10%, online gaming platform Roblox was down over 12%, while videogame engine maker Unity Software dropped 21%.
The AI model, dubbed "Project Genie", allows users to simulate a real-world environment through prompts with text or uploaded images, potentially disrupting how video games have been made for over a decade and forcing developers to adapt to the fast-moving technology.
"Unlike explorable experiences in static 3D snapshots, Genie 3 generates the path ahead in real time as you move and interact with the world. It simulates physics and interactions for dynamic worlds," Google said in a blog post on Thursday.
Traditionally, most videogames are built inside a game engine such as Epic Games' "Unreal Engine" or the "Unity Engine", which handles complex processes like in-game gravity, lighting, sound, and object or character physics.
"We'll see a real transformation in development and output once AI-based design starts creating experiences that are uniquely its own, rather than just accelerating traditional workflows," said Joost van Dreunen, games professor at NYU's Stern School of Business.
Project Genie also has the potential to shorten lengthy development cycles and reduce costs, as some premium titles take around five to seven years and hundreds of millions of dollars to create.
Videogame developers have been increasingly adopting artificial intelligence as a way to stand out in a highly competitive industry dominated by large players. A Google study last year showed that nearly 90% of game developers use AI agents.
However, the use of AI in videogames is a contentious topic, with many fearing that the technology could lead to a wave of job losses, after the industry went through record layoffs over the past few years as it recovered from a post-pandemic slump.
(Reporting by Zaheer Kachwala in Bengaluru; Editing by Vijay Kishore)
Read the original article
Comments
By ChrisArchitect 2026-01-3018:57 Related:
Project Genie: Experimenting with infinite, interactive worlds
By BiraIgnacio 2026-01-3018:291 reply Finance is not my thing so this is baffling to me. Unity stock is/was down 20% at some point? if it's just because of this, it's some reaction.
By CamperBob2 2026-01-3018:341 reply Way too many stupid people have way too much money. See also TSLA.
By inhumantsar 2026-01-3019:16 I'm willing to bet 90%+ of this kind of activity is bots trading on super basic NLP analysis of news headlines.
These days most market data providers offer news feeds with all that baked in and they do it cheaply enough that it's in reach of most hobbyist bot traders.
Even at small professional scales it wouldn't be terribly difficult or expensive to put together an in-house pipeline for categorization, entity extraction, and sentiment analysis. They're all pretty cheap computationally and don't require a significant amount of development time.
By functionmouse 2026-01-3019:171 reply The whales in the video game economy can be automated. It's been clear to me for a while that, while video games are indeed now the most lucrative form of media ever to have existed, most of that money is in slop. Skinner box phone games, match 3's, Temple Run/Subway Surfers clones, Clash of Clans clones, literal gambling games where you spend money for (worthless) tokens to enter matches with a prize pot where all the contestants are secretly bots and the outcome is determined before you even start playing...
I'm certain this could be automated, and the victims will continue bleeding. Can't help that, I guess, as long as the interested parties are eating good.
Worth noting, from the article,
> Shares of "Grand Theft Auto" maker Take-Two Interactive fell 10%, online gaming platform Roblox was down over 12%, while videogame engine maker Unity Software dropped 21%.
GTA and Roblox both rely heavily on these Skinner box style tactics to manipulate users into spending more money than they otherwise would for simple cosmetic or gameplay content. And I'm not entirely certain how unity falls into this but from what I understand it's one of the most popular engines for making phone games.
> Project Genie also has the potential to shorten lengthy development cycles and reduce costs, as some premium titles take around five to seven years and hundreds of millions of dollars to create.
Wouldn't this also lower the perceived value, and thus, potential revenue of these games, also?
> Videogame developers have been increasingly adopting artificial intelligence as a way to stand out in a highly competitive industry dominated by large players. A Google study last year showed that nearly 90% of game developers use AI agents.
How does doing something the way 90% of studios are doing it make you stand out, then?
By sooklord 2026-01-3019:20 [dead]
