Gaming firms may gain billions from AI cost cuts

Artificial intelligence could dramatically reshape the global video game industry, cutting development costs and unlocking as much as $22 billion in additional annual profits, according to a new analysis from Morgan Stanley.

The investment bank estimates that advanced AI tools could reduce game development costs by nearly 50%, fundamentally changing how modern video games are produced, tested, and maintained, News.Az reports, citing Reuters.

AI is increasingly being used to automate time-consuming tasks such as building game environments, generating dialogue, and testing software systems. These efficiencies could shorten production cycles and reduce reliance on large development teams.

The shift is expected to not only lower costs but also improve post-launch updates, allowing studios to maintain and expand games more efficiently over time.

The global gaming market is projected to reach $275 billion in consumer spending this year, with roughly $55 billion reinvested into development and operations, highlighting the scale of potential savings.

Morgan Stanley notes that the benefits of AI will not be evenly distributed across the industry.

Companies with strong platforms, intellectual property, and live-service ecosystems are expected to benefit the most, including major players such as Tencent, Sony Group Corporation, and Roblox Corporation.

Large publishers like Take-Two Interactive Software, Electronic Arts, and Ubisoft could also benefit from scaling AI across multiple titles and franchises.

One example is Grand Theft Auto VI, developed by Take-Two, which has been in production since around 2018 and is now scheduled for release in 2026 after multiple delays—highlighting how long and expensive modern game development has become.

While large publishers may gain efficiency, smaller or mid-sized companies could face increased competition as AI lowers barriers to entry.

Firms such as Playtika and Netmarble may find it harder to compete if game production becomes cheaper and more accessible to new entrants.

Game engine providers like Unity and Unreal Engine could also face disruption unless they successfully integrate AI capabilities into their platforms.

Analysts also expect AI to increase revenue opportunities by making games more engaging over longer periods. This could drive higher spending on in-game purchases, downloadable content, and subscriptions.

Rather than relying heavily on new releases, publishers may increasingly focus on continuously updating existing franchises using AI-generated content.

The broader AI boom is also accelerating infrastructure investment, with big tech companies expected to spend more than $600 billion on AI systems and computing power this year alone, underscoring the scale of the shift across industries.

Overall, Morgan Stanley sees AI not just as a cost-cutting tool, but as a structural change that could reshape profitability, competition, and content creation across the global gaming ecosystem.

News.Az 

By Aysel Mammadzada