Not too long ago, well-liked online game shares like GTA 6 proprietor Take-Two ($TTWO), sport improvement engine Unity ($U), and sandbox sport Roblox ($RBLX) noticed enormous sell-offs that hammered share costs within the wake of Google’s announcement of a brand new generative AI instrument referred to as Undertaking Genie.
The product claims it may create worlds “generated in actual time,” and other people rapidly put it to make use of to create rip-offs of Mario and Fortnite, amongst many others. The generative AI instrument seemingly spooked some traders, prompting the shares to get hammered. However how huge of a menace to the trade mainstays is Undertaking Genie, or generative AI techniques prefer it?
“Wall Road has misplaced the plot once more”
Rhys Elliott of Alinea Analytics instructed GameSpot that “Wall Road has misplaced the plot once more” and that generative AI is “not coming to eat the video games trade.”
Some traders might have panicked on the thought {that a} instrument like Undertaking Genie might disrupt the online game trade as a result of Google mentioned Undertaking Genie would permit anybody to generate a sport with a easy immediate. However that does not inform the entire story and leaves out quite a few important items of context.
“It is a technical impossibility masquerading as a breakthrough,” Elliott defined. “It is the identical form of DiSrUpTiOn we noticed with web3, blockchain, the metaverse, cloud gaming, and esports. How are they doing once more?”
He added: “The response to Genie is the clearest indicator but for what most of us already know: Typically talking, the inventory market fails to know how video games are made and what attracts gamers to them.”
The inventory costs for Take-Two, Roblox, and Unity haven’t totally rebounded because the dramatic dip on Friday, January 30, although Take-Two’s inventory did bounce again a bit after the corporate confirmed that GTA 6 was not delayed once more.
Take-Two and Unity’s share values are literally up greater than 10% over the previous 12 months, together with the current dip, however Roblox has been on a downward pattern since October 2025. This basic downturn for Roblox could also be extra associated to the lawsuits filed in opposition to it and criticisms that the corporate will not be doing sufficient to guard children.
Take-Two’s response to the inventory sell-off
Take-Two boss Strauss Zelnick lately commented on the corporate’s falling inventory value, telling The Game Business that folks on Wall Road could also be confused about what Undertaking Genie truly does.
“I feel the confusion although is… by some means the brand new expertise and the brand new instruments will develop into leisure experiences by themselves. That is simply not going to occur. Instruments should not leisure experiences. Creators use instruments to create nice leisure,” he mentioned.
Zelnick mentioned he was “stunned in regards to the market response” to Undertaking Genie. “Innovation is one in all our core tenets. Our three-part technique is to be probably the most artistic, probably the most revolutionary and probably the most environment friendly firm within the enterprise, and the improvements surrounding AI is certainly driving efficiencies, and we expect can also drive creativity. As a result of as instruments get higher, our groups can do cooler and cooler issues,” he mentioned.
Zelnick additionally identified that Take-Two has all the time embraced new applied sciences, and the corporate has already spun up “tons of of AI pilots and implementations” to take advantage of AI.
“This firm was constructed on using machine studying and synthetic intelligence,” Zelnick mentioned. “We’re actually keen about what this new expertise can imply. I’m much more optimistic than I’ve ever been. And I assumed the [Google] launch was a fantastic signal of issues to return. It is a chance, not an issue.”
“All type, no substance”
Undertaking Genie could also be a “cool analysis prototype” in Elliott’s eyes, however he predicts it can observe within the footsteps of different failed Google initiatives just like the gaming platform Stadia. Google generated quite a lot of hype and pleasure about Stadia, and even made some huge hires to create groups to make video games for it, however it all crashed and fell aside, with Stadia finally becoming a member of the Google Graveyard.
“Genie follows the identical sample of a flashy PR cycle adopted by a analysis prototype part with no viable path to a worthwhile client product,” Elliott mentioned. “Genie will likely be within the Graveyard by 2028.”
The sorts of “video games” that Genie can spit out in its present type should not viable sport merchandise, partially as a result of Genie seems to be coaching its mannequin on visible outputs as an alternative of the all-important supply code, Elliott believes.
“That is kind of like making an attempt to construct a working Ferrari by pictures of a Ferrari. You may get the form of the body and colour proper, and it would look very fairly and spectacular, however there is no engine below the hood. All type, no substance,” he mentioned.
Zelnick has mentioned AI is a compelling expertise for sport improvement, however individuals are largely overstating what it may do. Nobody will have the ability to immediate an AI expertise with, “Please develop the competitor to Grand Theft Auto that is higher than Grand Theft Auto” and have it ship one thing good, he mentioned. People will all the time be wanted to make compelling artwork, and instruments like AI might exist to assist them, however by no means to exchange human creativity utterly, the CEO mentioned.
A current survey of sport builders discovered that greater than 50% of surveyed builders mentioned they consider generative AI is a menace to the online game trade. Greater than 35% mentioned they had been already utilizing generative AI of their processes.
Doable authorized points and bubbles
Genie may additionally run into plagiarism and copyright points, which in flip may immediate an organization like Nintendo, or theoretically any rights-holder who feels their work is being infringed upon, to take motion.
“Nintendo’s attorneys are ruthless, and so they’re not going to love this,” Elliott mentioned. “Nintendo has a historical past of litigating in opposition to even fan-made initiatives utilizing their property and IP (like AM2R, Pokemon Prism, and Misplaced in Hyrule). A multi-billion-dollar company like Google utilizing its IP to coach a industrial AI is a very totally different kettle of Magikarp,” Elliott mentioned.
The AAA video games enterprise has an extended record of great and systemic points which can be all legitimate causes for concern from traders. However Genie will not be one in all them, Elliott mentioned.
There could also be useful use instances for generative AI applied sciences in sport improvement to assist builders make video games extra effectively, however Elliott mentioned individuals ought to “not mistake a little bit of effectivity for product evolution.”
“The actuality is that generative AI carries each hallmark of a basic enterprise capital bubble. We’re witnessing billions of {dollars} in speculative funding chasing an ROI that merely hasn’t materialized,” he mentioned.
Applied sciences like Genie are popping out now as a result of corporations like Google and different giants are attempting to “manufacture a brand new narrative” to hammer residence with shareholders in an effort to generate market appreciation, when in actuality, the expertise might not truly work as promised at scale. That is a part of the rationale why some observers and specialists within the wider expertise area have mentioned AI is a bubble set to pop.
“Profound moral decay”
There may be additionally the matter of ethics, Elliott mentioned, stating that there’s a “profound moral decay on the coronary heart of” a generative AI mannequin that basically devalues the medium of video video games. Generative AI fashions prepare on publicly obtainable property, and do not create something new of their very own, in spite of everything.
“If video games prioritize high-speed, automated output over human intentionality, it dangers buying and selling away its creativity, its jobs, and its soul for a library of infinite, tasteless content material,” he mentioned. “If every part is procedurally generated by a machine that does not perceive enjoyable, then nothing is definitely price enjoying.”