Due to Google DeepMind's launch of Project Genie, market concerns that this artificial intelligence (AI) tool could disrupt the gaming industry have led to collective declines for Unity and a host of gaming companies. As of the U.S. market close on Friday (January 30th), virtual engine developer Unity Software plummeted 24.22%, marking its largest single-day drop since 2022; "Grand Theft Auto" series developer Take-Two Interactive fell 7.93%, metaverse community Roblox dropped 13.17%, and mobile technology company AppLovin declined 16.89%.
Investment bank William Blair analyst Dylan Becker wrote in a note to clients, "This price reaction further proves that against the backdrop of AI uncertainty, market sentiment is exhibiting a 'shoot first, ask questions later' type of panic, an emotion that has been suppressing the entire software sector in recent months."
It was previously reported that Google DeepMind opened Project Genie to external access on Friday. It is considered one of the most advanced world models currently available and can be seen as an experimental research prototype of the world model Genie3, marking the first time this world model has been made publicly available in an interactive form.
Unlike content generation large models like OpenAI's Sora, Genie3's functionality is not limited to multimodal content generation; it can generate a complete space, achieving "world creation from nothing." Some analysts believe this type of tool could completely revolutionize the way video games are made, a viewpoint that has severely impacted gaming stocks.
Similarly, the SaaS (software-as-a-service) sector also experienced a round of selling due to concerns sparked by the capabilities of Anthropic's Claude tool. However, Wall Street analysts, on the whole, have not lost confidence, with some viewing this as an opportunity for investors to buy Unity on the dip.
Evercore ISI analyst Robert Coolbrith wrote in a note discussing AppLovin, "We believe today's move in gaming stocks largely disregards the importance of creativity in open-world games and the significance of social/network effects."
Becker stated that while the market worries Google's platform could erode Unity's market share (approximately 70% of the top 1,000 mobile games globally use Unity's tools), this concern overlooks the fact that the Unity platform has also embedded similar AI capabilities, suggesting the related anxieties are "overblown."
Analyst Nathan Naidu pointed out that Google's AI tool is "unlikely to pose a near-term threat to EA, Take-Two, Roblox, and Unity," but he also warned that if it evolves into a platform capable of producing commercial-grade games, it could constitute a long-term risk.
Comments