Shares of video game companies tumbled in Friday afternoon trading after Alphabet's Google introduced an artificial intelligence model capable of creating interactive digital worlds from simple prompts. Take-Two Interactive, the maker of "Grand Theft Auto," saw its stock price drop by 10%, online gaming platform Roblox fell more than 12%, and video game engine developer Unity Software plunged 21%. Dubbed "Project Genie," this AI model enables users to simulate real-world environments through text prompts or uploaded images, potentially upending over a decade of video game production methods and forcing developers to adapt to the rapidly evolving technology. "Unlike exploration in a static 3D snapshot, Genie generates the path ahead in real-time as the user moves and interacts with the world. It simulates physics and interactions for dynamic worlds," Google stated in a blog post on Thursday. Traditionally, most video games are built within game engines, such as Epic Games' "Unreal Engine" or the "Unity Engine," which handle complex in-game processes like gravity, lighting, sound, and the physics of objects or characters. "Once AI-based design starts creating unique experiences, rather than just speeding up traditional workflows, we will see a real shift in development and output," said a game professor from New York University's Stern School of Business. Project Genie also holds the potential to shorten lengthy development cycles and reduce costs, as some high-end games require approximately five to seven years and hundreds of millions of dollars to produce. Video game developers are increasingly adopting artificial intelligence as a means to stand out in a fiercely competitive industry dominated by large corporations. A Google study from last year revealed that nearly 90% of game developers utilize AI agents. However, the use of AI in video games remains a contentious issue, with many concerned that the technology could trigger significant job losses, especially as the industry recovers from a post-pandemic downturn that has already seen record layoffs in recent years.
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