Wall Street Says AI Could Be Gaming’s $22B Cheat Code
Video games have always been expensive to make, but that may be about to change. Morgan Stanley analysts say AI could nearly halve development costs for an industry that sinks ~20% of its revenue into making games. The windfall, while set to free up $22B annually, won’t be shared equally, though — and that’s where it gets interesting.
- From building game environments to writing dialogue and testing software, AI handles the grunt work — shrinking team sizes and accelerating post-launch updates.
- Beyond cutting costs, AI could juice the top line, too — keeping players hooked longer and driving more in-game purchases, add-ons, and subscription revenue.
Who really upgrades: As AI lowers barriers, the spoils tilt toward scale. Weaker franchises suddenly face far tougher competition, while the bank expects the “biggest beneficiaries [to] ... control distribution, data, and engagement.” That includes ecosystems like TencentTCEHY, SonySONY, and RobloxRBLX, which are poised to capture margin upside and milk flagship hits. In other words, loyalty could become the only moat left that really matters.