Microsoft, Sony Among AI Winners in Games, Morgan Stanley Says

Game platforms including Microsoft Corp.’s Xbox and Sony Group Corp.’s PlayStation will be “the most clear-cut beneficiaries of AI adoption in the game industry,” according to Morgan Stanley.

Platform companies should be more insulated from risks of disruption posed by artificial intelligence, and will in fact likely become the primary means for distributing AI tools, analysts led by Matthew Cost wrote in a note. Others they see falling into this group include Unity Software Inc., Roblox Corp. and Tencent Holdings Ltd.

The advent of AI offers the industry a chance to overhaul a business model that has in some cases become bloated and formulaic. Game companies are also adopting and developing AI tools in response to escalating costs and stagnant product prices.

“New AI tools look set to change how games are made,” the Morgan Stanley analysts wrote.

The impact for publishers, however, will likely be mixed. While the technology will lower the cost of making and operating top-tier “AAA” games by up to 15%, it will also increase competition, they added.

AI Is Rewriting the Rules of $200 Billion Games Industry

Morgan Stanley sees a “clear AI bull case” for larger AAA game publishers like Ubisoft Entertainment SA, Nexon Co. and Take-Two Interactive Software Inc. — with the latter seeing a potential 10% earnings lift from lower costs. Smaller publishers such as Playtika Holding Corp., on the other hand, will benefit the least from AI and may suffer from lower barriers to entry, according to the report.