This week, big game companies saw their stock prices fall after Google introduced Project Genie 3. This new AI tool lets people create virtual worlds just by typing words, and each world lasts for about 60 seconds.
Companies like Take-Two, CD Projekt, Unity, and even Roblox lost between 8 to 20 percent of their value. Worried investors seemed to think this new tech could take the place of game developers. But that’s not true, of course – not yet anyway.
As Jason Schreier from Bloomberg wrote, “Gaming stocks are dropping today after Google’s rollout of Project Genie, an AI tool that lets users create and explore virtual worlds for 60 seconds. This is the result of a market that does not understand how video games are made.
“To be clear, this is not a referendum on the quality of AI content,” he added. “Markets are spooked because they believe tools like Project Genie will allow anyone to generate a video game. This is not actually possible.” He then suggested traders take a look at his latest book, Blood, Sweat, and Pixels.
Video game stocks are suddenly crashing today with the launch of Google’s Project Genie as investors think games will start magically getting made with AI ➡️ ca.investing.com/news/stock-… #GoogleGemini #TakeTwo #CDProjektRED #Roblox #videogames
[image or embed]
— Shinobi602 (@shinobi602.bsky.social) January 30, 2026 at 5:23 PM
To see this content please enable targeting cookies.
Shinobi602 added a similar thought: “Video game stocks are suddenly crashing today with the launch of Google’s Project Genie as investors think games will start magically getting made with AI.”
Genie 3 is described as a general-purpose world model that can take text descriptions and create “photorealistic environments that can be explored in real-time”. The environments are interactive and controllable, and offer “world consistency and stability”. This includes both real-life and make-believe scenes shown in realistic 3D or cartoon styles.
And it does look amazing. The examples shown – which include the words used to make them – are very impressive, most of which respond to outside controls or inputs.
But the technology comes with several problems, not least that its interactive parts are very limited, and creations are only one minute long. It would be very unwise to suggest that Genie couldn’t challenge game engines like Unity and Unreal one day, but given the very limited examples provided, it’s unlikely to do so anytime soon.
AI, of course, continues to create strong arguments across the industry. In 2024, a report by Unity claimed 62 percent of studios using its tools used AI at some point during game development, most notably in animation. A GDC survey from that same year, meanwhile, said that around a third of industry workers reported using AI tools already. That number is now likely to be higher, and a more recent Tokyo Games Show survey reported over half of Japanese game companies are using AI in development.
