MOUNTAIN VIEW: Google DeepMind launched Project Genie on January 29, sending video game stocks into sharp decline as investors assessed the implications of AI-generated interactive worlds for the gaming industry.
Unity Software plunged 24 percent, marking its worst single-day drop since 2022. Roblox fell 13 percent, while Take-Two Interactive and CD Projekt dropped 7.9 percent and 8.7 percent respectively. Mobile technology firm AppLovin declined 17 percent.
Project Genie, now available to Google AI Ultra subscribers in the United States, enables users to create and explore virtual worlds through text prompts and images. Powered by the Genie 3 world model alongside Nano Banana Pro and Gemini, the prototype generates navigable environments in real-time as users move through them, simulating physics and interactions across dynamic 3D spaces.
The tool supports multiple perspectives including first-person and third-person views, allows camera adjustments during exploration, and enables users to remix existing worlds. Created environments can be downloaded as videos. Current limitations include 60-second generation windows, occasional physics inconsistencies, and character control challenges.
Early testing revealed users could recreate recognizable game worlds, including approximations of Nintendo properties and Grand Theft Auto environments, raising immediate copyright concerns. The capability to generate interactive worlds from simple prompts sparked investor fears about potential disruption to traditional game development workflows and platforms.
Freedom Capital noted the rapid selloff reflected panic over AI’s potential to fundamentally alter game creation economics. Analysts suggested concerns centered on whether AI-generated worlds could diminish demand for professional game engines, development platforms, and established gaming franchises.
Google emphasized Project Genie remains an experimental research prototype in Labs, designed to advance understanding of world models across AI research and generative media applications. The company plans to expand access beyond US AI Ultra subscribers to additional territories.
The technology builds on Google DeepMind’s history developing agents for specific environments like Chess and Go, now extending toward systems capable of navigating real-world diversity as part of the company’s AGI mission.
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