Global technology and gaming markets faced a significant shock last Friday as shares in industry giants took a sharp downturn.
The sell-off was triggered by a jittery reaction to Google’s latest announcement regarding Project Genie. Powered by the Genie 3 model, this artificial intelligence technology promises to fundamentally reshape the landscape of video game development.
Friday’s trading session was characterised by panic selling across stocks linked to game engines and social platforms. Among the hardest hit were:
Unity Software (U): Plunged by approximately 25%, recording the steepest losses among its peers. As a provider of popular development engines, Unity is viewed as particularly vulnerable if AI becomes capable of creating games without the need for complex coding.
Roblox (RBLX): Fell by 13% amid investor concerns that users might pivot to generating their own AI worlds rather than engaging within the Roblox ecosystem.
Take-Two Interactive (TTWO): The major video game publisher saw its shares dip by nearly 9%, dragged down by broader market uncertainty regarding the future of traditional game publishing.
What is Google Genie 3?
Billed as a “text-to-world” model, Google Genie 3 was showcased to Google AI Ultra subscribers. The technology allows users to type simple prompts or upload images, from which the AI instantly generates playable, interactive 3D environments.
Investors fear the technology will significantly lower barriers to entry, enabling anyone to create high-quality video games without the technical skills or expensive software suites currently offered by firms like Unity or Unreal Engine.
Analysts: ‘Market overreaction’
Despite the mass sell-off, many market analysts have described the reaction as premature. Experts from Wells Fargo and other investment firms point out that Genie 3 remains in the prototype phase with significant limitations.
For instance, the model is currently only capable of generating interactive clips of around 60 seconds, rather than full games. These are largely interactive visuals lacking actual gameplay loops, scoring systems, or complex objectives.
Furthermore, generative AI technology remains prone to visual errors or “hallucinations”, meaning it is not yet stable enough for commercial game development.
Markets are expected to remain volatile in the coming days as investors reassess the true extent of the threat AI poses to the video game industry’s traditional business models.