Shares of videogame-related companies slid in afternoon trading on Friday following Alphabet's announcement of Project Genie, an artificial intelligence model that Google says can create dynamic, explorable virtual worlds in response to simple prompts. Market moves were pronounced for companies tied to major game titles, online platforms and engine software.
Take-Two Interactive, the publisher behind the Grand Theft Auto franchise, and Roblox, operator of a popular online gaming platform, both fell about 9% in the session. Unity Software, the developer of a widely used videogame engine, dropped roughly 19%.
Google described Project Genie as a system that lets users "simulate a real-world environment through prompts with text or uploaded images," and said it generates paths and interactions in real time as users move and engage with the generated environment. In its announcement, Google contrasted Genie 3 with static 3D experiences, saying it "generates the path ahead in real time as you move and interact with the world. It simulates physics and interactions for dynamic worlds."
For decades, many videogames have been constructed inside comprehensive game engines - such as Epic Games' Unreal Engine or the Unity engine - which manage complex functions including in-game gravity, lighting, sound and object physics. Project Genie introduces an alternate approach by producing interactive content from natural language or images, a capability investors viewed as potentially disruptive to established development workflows.
Analysts and market participants noted that the technology could shorten traditionally long development cycles and trim costs for certain titles. The article referenced the industry reality that some premium videogames require five to seven years and hundreds of millions of dollars to develop. The emergence of generative AI tools in development pipelines is already under way, with nearly 90% of game developers reported to be using AI agents in some capacity, according to a Google study cited by the announcement.
At the same time, the increased role of AI in game production has raised contentious debates about labor and creative rights. The videogame industry has experienced record layoffs in recent years during a post-pandemic adjustment, and concerns about job displacement have been amplified by broader adoption of AI. In 2024, videogame voice actors and motion-capture performers staged a strike over worries that AI was being trained on their voices without consent or compensation.
The market reaction on Friday reflects investor sensitivity to technologies that could alter competitive dynamics, development economics and labor needs across the videogame ecosystem. How developers, platforms and engine providers respond to a capability that can rapidly generate interactive environments remains an open question based on the information released to date.