Video game stocks slide on Google's AI model that turns prompts into playable worlds

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 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.