Several gaming stocks declined on Friday after Google released Project Genie, a world model that can create game-like experiences from a prompt.
Google’s AI tech can generate the demos for 60 seconds at a time, and has been trained on publicly available video content, according to Google.
The release of a hype video on Friday was interpreted by the markets as a blow to existing publicly-traded gaming companies. Stock in Take-Two and Roblox dropped 10-12%, while game engine and adtech giant Unity was the hardest hit as its shares tumbled 20%.
The fall moved CEO Matthew Bromberg to respond on X and LinkedIn. He called Project Genie’s outputs “unsuitable on their own for games that require consistent, repeatable player experiences”.
Bromberg also suggested that Unity aims to help turn these AI concepts into consistently playable games. “Unity’s role is to operationalize these advances,” he continued. “Outputs from world models are ingested into Unity’s real-time engine, where they are converted into structured, deterministic, and fully controllable simulations.”
“Within Unity, creators define physics, gameplay logic, networking, monetization, and live-operations systems to ensure consistent behavior across devices and sessions.”
He concluded: “Unity remains the system of record for runtime, distribution, and long-term operations. [Google’s Genie tech] broadens Unity’s addressable market and reinforces its central role in the interactive ecosystem.”
Fellow game engine giant Epic does not trade on public markets, but boss Tim Sweeney still had plenty to say on the Genie demo. He predicted that long term there will be “constant leapfrogging between engine-centric AI and world model-centric AI until they come together for maximum effect.”
He later said on X: “World models are limited by a lack of memory, and by the fact that memory is in an inefficient and expensive format….”
“The ideal evolutionary path sees a merging of world models and engines, the AI side providing vast amounts of loosely organized audiovisual and textual knowledge, and the engine providing consistent reproducible data representation and simulation.”
Game developers, investors and industry pundits across social media were also quick to point out that Google’s demo will have little impact on game-making in the short term – though The Verge‘s experiments with the tech delivered some impressive initial results.
“Most investors misunderstand the Google Genie launch,” said A16Z general partner Jonathan Lai. “World models won’t build traditional AAA video games anytime soon. Games today are fundamentally deterministic…world models like Genie are different. They’re probabilistic – meaning the next frame is inferred, not scripted. Neither player nor developer knows exactly what will happen until it does. That makes them poorly suited for traditional games.”
Analyst Joost van Dreunen said: “It’s an understandable mistake from Wall Street investors to paint the entire sector with the same brush. But in creative industries like gaming, infrastructure doesn’t determine winners – content does.”
“Take-Two isn’t down because Project Genie threatens Rockstar’s engine,” added van Dreunen. “It’s down because the market hasn’t figured out yet who actually gets squeezed and who benefits from lower barriers to entry.”
Veteran game developer Mitchell Smallman summed up the industry chatter best, by adding: “I have now seen more “People who think Google Genie is a big deal have never made a game” posts than “Google Genie is a big deal” posts.”
