Is Google’s Project Genie an industry killer? Experts say no, but investors have doubts.

Video game stocks have been getting repeatedly KO’d recently, following the launch of Google’s new generative-AI tool, Project Genie, which lets users create interactive, “playable” worlds with a text or image prompt for just $125 a month.

It’s the latest aggro move from a villain Bloomberg’s Matt Levine calls the “AI Whateverpocalypse,” wherein newly announced AI applications trigger steep losses in whatever market they happen to focus on (be it enterprise software, financial data, or trucking).

Gaming giants have shed billions of dollars since Project Genie launched on January 29, with companies including Unity Software, Take-Two, and Roblox experiencing sharp sell-offs, as we charted here.

This blow follows high memory costs already weighing on hardware makers (also due to AI, in a different way), which is driving console makers like Sony to delay product launches — possibly by years for its PlayStation 6.

Investors see Google’s world model as a potential silver bullet for the gaming industry, dramatically lessening costs and increasing the supply of interactive games.

But experts note that Project Genie can only generate one-minute-long experiences at 720p resolution and 24 frames per second that lack depth and rip off popular intellectual property.

Meanwhile, gaming companies are powering up their own AI efforts: Roblox launched the open beta of its “4D” AI creation tool, and Unity has said AI-driven authoring is a major focus for the company in 2026.

The Takeaway

Lost in the chatter is how much the broader gaming community really, really hates AI-generated anything in games. In December, game publisher Running With Scissors scrapped a planned game over negative reactions to AI-generated graphics in its trailer. In the same month, the Indie Game Awards revoked its Game of the Year award for “Clair Obscur: Expedition 33” after it discovered the developer, Sandfall Interactive, had launched the game with AI-generated textures.

Finally, many of the biggest games succeed not only because of the quality of the games themselves, but because they generate deeply rooted player communities — something AI can’t conjure.