CICC: Leading game developers still possess a strong content moat

CICC’s research report indicates that the current application of world models in game development is still in its early stages, playing a partial empowering role, with significant efficiency improvements in pre-research and 3D asset production. In the future, it is more likely to serve as a single-scene generation tool rather than a comprehensive game foundation. CICC predicts that the most directly impacted segment is the outsourcing service sector within the industry chain that has a high degree of standardization, primarily including art asset production, basic audio recording, and some coding. One direction for the migration of profit pools is the upstream creative and management segments of the game industry chain. CICC believes that leading game companies still possess strong content moats. In the medium to long term, companies that are adept at utilizing AI to empower creation, exploring AI’s potential, and continuously consolidating IP and gameplay advantages are expected to have sustainable advantages amid the current transformation. An “ecosystem platform” that aggregates creators and tools is expected to embrace AI and innovate tools to control new production and distribution entry points, gaining new growth amid the transformation. Mid-tier engine providers, due to the high barriers created by pipeline data, are difficult to replace in the short term, but the long-term reconstruction of business models remains to be verified. Small and medium-sized firms and studios face both the opportunities of lowered creative thresholds and the challenges of content homogenization.

The full text is as follows

CICC | AI Entertainment Observation: Starting from World Models, Discussing AI’s Impact on the Game Industry Again

CICC Research

With the introduction of AI-generated physical world models like Genie3, a heated discussion about “the game industry will be disrupted” has emerged in the market. The core viewpoint of this report is: the market has overestimated the short-term disruptive power of AI models on the game industry while underestimating their long-term empowering value as tools. The world model represented by Genie3 is essentially a highly efficient content generation tool, but it does not touch the core of games—gameplay design, balance of values, and long-term operation. Leading game companies still have a strong content moat.

Abstract

Is the world model a disruptive productivity force in the game industry? What is the direction of its application development in the game industry? We believe that the current application of world models in game development is still in its early stages, playing a partial empowering role, with significant efficiency improvements in pre-research and 3D asset production. In the future, it is more likely to serve as a single-scene generation tool rather than a comprehensive game foundation.

Will new AI technologies reshape the game industry chain? Who will benefit? We assess that the most directly impacted segment is the outsourcing service sector in the industry chain that has a high degree of standardization, primarily including art asset production, basic audio recording, and some coding. One direction for the migration of profit pools is the upstream creative and management segments of the game industry chain. We believe:

Leading game companies still possess strong content moats. In the medium to long term, companies that are adept at utilizing AI to empower creation, exploring AI’s potential, and continuously consolidating IP and gameplay advantages are expected to have sustainable advantages amid the current transformation.

An “ecosystem platform” that aggregates creators and tools is expected to embrace AI and innovate tools to control new production and distribution entry points, gaining new growth amid the transformation.

Mid-tier engine providers, due to the high barriers created by pipeline data, are difficult to replace in the short term, but the long-term reconstruction of business models remains to be verified.

Small and medium-sized firms and studios face both the opportunities of lowered creative thresholds and the challenges of content homogenization.

Risks

The lowering of game production thresholds and intensified market competition, potential competition brought by AI-native gameplay, copyright issues of AI content, and the low user acceptance of AI content.

(Source: Jiemian News)