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The recent selloff in video-game developer stocks — tied to fears of disruption from Google’s Project Genie AI tool — is “unjustified,” mBank SA analysts said.
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Shares of Unity Software Inc., Roblox Corp. and CD Projekt SA plunged on Friday after Google unveiled its AI prototype for generating virtual 3D worlds, on concerns it could threaten existing game developers. Unity and Roblox rebounded in premarket trading Monday, while CD Projekt fell in Warsaw for a third-straight session.
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mBank said the selloff overlooked the Google tool’s current limitations, adding that the technology will ultimately benefit larger studios.
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“Given the current usability of Project Genie, we regard Friday’s selloff in game-developer stocks as an unjustified overreaction,” mBank analyst Piotr Poniatowski said. “Counterintuitively, we believe AAA game developers will benefit most from such tools,” he added, referring to bigger studios.
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The prototype Genie web app allows users to generate their own playable worlds by typing in text prompts or uploading images. It allows the creation of characters who can travel through various environments, albeit while currently only offering limited playing times and experiences.
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For mBank’s Poniatowski, Genie’s promotional videos suggest that AI tools could eventually lead to a surge in new games and solo projects, intensifying competition among smaller studios. The largest developers with strong franchises and “immersive” storytelling, are unlikely to be “much at risk,” he noted.
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“If we look from a pure game creation perspective, we don’t see AAA studios losing their value proposition,” noted Wedbush analyst Alicia Reese. “Existing platforms remain well-positioned to compete.”
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Still, concerns around AI continued to weigh on European gaming stocks on Monday. CD Projekt fell a further one per cent, while Ubisoft Entertainment SA declined 2.9 per cent.
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