CICC: Leading game developers still possess a strong content moat

CICC research reports that the current application of world models in game production is still in its early stages, providing localized enablement. It is especially effective in pre-research and 3D asset creation, improving efficiency. In the future, it is more likely to serve as a single-scene generation tool rather than a comprehensive game foundation. CICC believes that the part of the industry chain facing the most direct impact is the outsourced service segment with a higher degree of standardization, mainly including art asset production, basic audio recording, and some code writing. One of the directions for the profit pool to shift is the creative and management functions at the upstream of the game industry chain. CICC believes: top game publishers still have a strong content moat. Over the medium to long term, companies that are good at leveraging AI to empower creation, tapping AI potential, and continuously strengthening IP and gameplay advantages are expected to have enduring advantages amid the current transformation. “Ecosystem platforms” that aggregate creators and tools are expected to gain additional growth in the transformation by embracing AI and innovative tools to seize new production and distribution entry points. Engine providers in the midstream are hard to be replaced in the short term because pipeline data creates high barriers, but whether their long-term business model can be rebuilt still needs to be verified. Small and mid-sized studios and publishers face both a democratization opportunity brought by lower barriers to creation and the challenge of a surge in homogenized content.

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CICC | AI Culture & Entertainment Weekly: Starting from World Models and Rethinking AI’s Impact on the Game Industry

CICC Research

With the appearance of AI-generated physical world models such as Genie3, the market has sparked heated discussion about “the game industry being upended.” The core view of this report is: the market overestimates AI models’ short-term disruptive power on the game industry, while underestimating their long-term value as tools for empowerment. World models represented by Genie3 are essentially high-efficiency content generation tools, but they do not touch the core of games—gameplay design, numerical balancing, and long-term live operations. Top game publishers still have a strong content moat.

Executive Summary

Are world models a disruptive new production capability for the game industry? In what direction will they develop for application in the game industry? We believe that, in the game production process, the application of world models is still at an early stage, playing a localized enabling role. It is more noticeably effective in pre-research and 3D asset creation. In the future, it is more likely to be used 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 judge that the outsourced service segments with a higher degree of standardization in the industry chain are the most directly exposed to disruption, mainly including art asset production, basic audio recording, and some code writing. One direction for the shift of the profit pool is the creative and management functions upstream of the game industry chain. We believe:

Top game publishers still have a strong content moat. Over the medium to long term, companies that are good at leveraging AI to empower creation, tapping AI potential, and continuously strengthening IP and gameplay advantages are expected to have enduring advantages amid the current transformation.

“Ecosystem platforms” that aggregate creators and tools are expected to obtain incremental growth in the transformation by embracing AI and innovative tools to control new production and distribution entry points.

Engine providers in the midstream are hard to be replaced in the short term because pipeline data creates high barriers, but their long-term business model restructuring still needs to be verified.

Small and mid-sized publishers and studios both face an equalization opportunity as barriers to creation decline, along with the challenge of a glut of homogenized content.

Risks

Lower barriers to game production and intensifying market competition, competition brought by potential AI-native gameplay, copyright issues related to AI content, and users’ relatively low acceptance of AI content.

（Source: Jiemian News）