CICC: Leading game developers still possess a strong content moat

Goldman Sachs Research Report states that the current application of world models in game development is still in its early stages, mainly providing localized empowerment. It has shown significant efficiency improvements in pre-research and 3D asset creation. In the future, it is more likely to serve as a single-scene generation tool rather than a comprehensive game platform. Goldman Sachs believes that the most directly impacted part of the industry chain is the highly standardized outsourcing services, including art asset creation, basic audio recording, and some coding. One direction for profit pool migration is the creative and management segments upstream in the game industry chain. Goldman Sachs thinks that leading game companies still have a strong content moat. In the medium to long term, companies that effectively leverage AI for creation, explore AI potential, and continuously strengthen IP and gameplay advantages are expected to maintain a competitive edge amid current changes. Ecosystem platforms that aggregate creators and tools may seize new production and distribution channels by embracing AI and innovative tools, gaining additional growth during the transformation. Due to high barriers built by pipeline data, midstream engine providers are difficult to replace in the short term, but long-term business model restructuring remains to be validated. Small and medium-sized developers and studios face both opportunities from lowered creation barriers and challenges from a surge in homogeneous content.

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Goldman Sachs | AI Entertainment Observation: Starting from World Models, Reassessing AI’s Impact on the Gaming Industry

Goldman Sachs Research

With the debut of AI-generated physical world models like Genie3, the market has sparked heated discussions about the potential upheaval of the gaming industry. Our core view in this report is that the market overestimates AI models’ short-term disruptive power in gaming, while underestimating their long-term empowering value as tools. The world models represented by Genie3 are essentially high-efficiency content generation tools, but they do not touch the core of gaming—gameplay design, balance, and long-term operation. Leading game companies still possess strong content moats.

Summary

Is the world model a disruptive force in the gaming industry? What is the development direction of its application? We believe that the current use of world models in game development remains in its early stages, mainly providing localized empowerment. They significantly improve efficiency in pre-research and 3D asset creation and are more likely to serve as single-scene generation tools rather than comprehensive game engines in the future.

Will new AI technologies reshape the game industry chain? Who will benefit? We judge that the most directly impacted are the highly standardized outsourcing segments, including art asset creation, basic audio recording, and some coding. One direction for profit migration is the creative and management segments upstream in the industry chain. We believe:

Leading game companies still have a strong content moat. In the medium to long term, companies that excel at leveraging AI for creation, exploring AI potential, and continuously strengthening IP and gameplay advantages are expected to maintain a sustainable edge amid current transformations.

Ecosystem platforms that aggregate creators and tools may harness AI and innovative tools to control new production and distribution channels, gaining incremental growth during the transition.

Midstream engine providers, due to high barriers built by pipeline data, are difficult to replace in the short term, but long-term business model restructuring remains to be validated.

Small and medium-sized developers and studios face both opportunities from reduced creation barriers and challenges from a surge in homogeneous content.

Risks

Lowering of game development barriers and increased market competition, potential competition from AI-native gameplay, copyright issues related to AI-generated content, and lower user acceptance of AI content.

(Source: Jiemian News)