Unity, Roblox, Take-Two Shares Fall After Meta AI Announcement – Here’s Why

TLDR

• Meta announced Horizon Create and Horizon Studio, AI tools that let users build 2D and 3D mobile games using text prompts
• Take-Two Interactive, Unity Software, and Roblox shares all fell Thursday following the announcement
• Unity was hit hardest, dropping around 6%, while Take-Two fell 1.6% and Roblox slipped 0.3%
• An analyst said the market reaction may be overdone since Horizon’s actual capabilities are still unknown
• This mirrors a similar stock drop in January when Alphabet’s Project Genie sparked the same investor worries

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Videogame stocks dropped on Thursday after Meta Platforms revealed new artificial intelligence tools built for creating mobile games. The announcement came during the second day of Meta’s Connect conference.

Meta introduced two tools called Horizon Create and Horizon Studio. Both let users describe a game idea in their own words and watch the system turn it into a playable experience.

Horizon Create works on smartphones. Horizon Studio is designed for browsers on computers. People can sign up for a wait list to get early access once it becomes available.

How The Market Reacted

Shares of Take-Two Interactive fell 1.6% to $202.98. Unity Software dropped as much as 6% to around $41.42. Roblox slipped 0.3% to $48.83.

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AppLovin also declined about 1% following the news. All four companies compete in some part of the game development or distribution space that Meta’s new tools could touch.

Nick McKay, a videogaming analyst at Freedom Capital Markets, said investors are worried AI could make game creation too easy. He said this could weaken the advantage that established game companies currently hold.

Take-Two declined to comment when reached by Barron’s. Unity and Roblox did not respond to requests for comment either.

Not The First AI Scare For Gaming Stocks

This is not the first time an AI announcement from a large tech company has rattled videogame investors. On January 30, the same stocks fell after Alphabet announced Project Genie, a tool that can generate fully rendered 3D worlds using AI.

Take-Two President Karl Slatoff pushed back on comparisons at the time. He said Genie was not a game engine and could not be compared to an actual game builder.

McKay pointed out that Meta’s demonstrations were shown in a controlled setting. He said outside parties have no way yet to test the tools themselves.

He added that it could be a long time before something like Horizon poses a real threat to a large studio like Take-Two. Take-Two publishes major titles, including Grand Theft Auto VI, which is set to release in November after years of development.

Large studios rely on big teams working on storylines, world building, and game mechanics. McKay said these elements are harder to replace with simple AI tools.

Unity, which provides software used by other companies to build games, could face more risk than a studio like Take-Two. Still, McKay said even that risk looks distant for now.

He noted that Unity’s stock bounced back over time after the Project Genie scare in January. He said short-term market reactions tend to be exaggerated, though he could not say the same for the long term.

Meta said the games built with Horizon Create and Horizon Studio will appear across Facebook, Instagram, and Horizon platforms. Discovery will be based on engagement, meaning games that keep players interested will get more visibility.

The company plans to let creators earn money through in-game purchases and a Creator Fund. All content will first pass through Meta’s safety systems and receive an automated age rating before going live.

Meta said early access to the tools will roll out gradually, with wider availability planned in the near future.