The gaming industry is on the brink of a major transformation, as artificial intelligence (AI) takes center stage.

Analysts led by Matthew Cost at Morgan Stanley project that AI will reshape business models and heighten competition in the sector. 

Big players like Microsoft’s Xbox, Sony’s PlayStation, Unity Software, Roblox, and Tencent Holdings are poised to reap the rewards.

These industry giants are expected to become primary distributors of AI tools, leading to a potential overhaul of the industry’s outdated business models. The introduction of AI technology is predicted to slash the production and operational costs of high-end AAA games by as much as 15%.

This cost reduction could translate into substantial earnings growth for major AAA game publishers like Ubisoft Entertainment, Nexon, and Take-Two Interactive Software, with a potential 10% boost in their earnings.

However, the AI revolution may not be as favorable for smaller publishers like Playtika Holding. 

These companies might encounter reduced barriers to entry and heightened competition in the wake of AI integration. 

This shift may limit their ability to fully harness the advantages of AI in their operations.