Google's new AI tool causes gaming stocks to plummet

After Google released its experimental AI tool, Project Genie, stock prices of major players in the gaming industry plummeted drastically on Friday. GTA publisher Take-Two fell by 10 percent, metaverse platform Roblox lost 12 percent, and the game engine Unity even lost 21 percent of its value, reports Reuters.

Project Genie creates interactive environments from text descriptions or uploaded images. Usage is currently limited to the USA and requires an active subscription for Google AI Ultra. The AI world model generates not only the visuals but also physical processes and allows users to control a freely definable character through the world. The perspective and mode of movement can also be individually set.

Over the weekend, videos of generated environments went viral online, some of which are reminiscent of well-known game franchises. According to researchers from Google DeepMind, the first Genie world model was trained on a dataset of over 200,000 hours of publicly available internet gaming videos.

(Not yet) a replacement for game development

The videos circulating online suggest at first glance that Project Genie can be used to create full-fledged video games. In reality, the technology is still very limited: experiences are restricted to 60 seconds and create environments based on player input, meaning without an overarching game world or prior level design. Game mechanics and sound are missing, as is the ability to import environments into game engines like Unity or Unreal for further processing. However, the technology could already be used for prototyping ideas for game environments.

Against this backdrop, the stock plunge is an overreaction by Wall Street. Gaming journalist and author Jason Schreier accused investors (Bluesky link) of not understanding how video games are actually made. Tim Sweeney of Epic Games pointed out (X link) how quickly AI is developing and highlighted the long-term potential of the technology. The company and gaming heavyweight, which develops the Unreal Engine and the video game “Fortnite,” is not publicly traded and therefore remained unaffected by the stock losses.

Amidst an industry characterized by exploding production costs and waves of layoffs, AI is fueling further uncertainty. Although the technology is still far from taking over game development, its use for increasing efficiency is already raising concrete fears about the continued existence of further jobs. According to a recent survey, more than half of all developers now believe that generative AI will have a negative impact on the industry.

(afl)