The release of Google’s Genie 3 world model had caused gaming stocks to crash, but it appears that these models might not replace conventional games anytime soon.
Jon Lai, General Partner at Andreessen Horowitz, argues that most investors fundamentally misunderstand what Google’s Genie launch represents. The real opportunity, he says in an X post, isn’t recreating existing blockbusters like Fortnite or Grand Theft Auto — it’s the emergence of an entirely new storytelling medium, comparable to the invention of film, comics, or short-form video.
According to Lai, world models won’t build traditional AAA video games anytime soon, and for good reason. Modern games are deterministic systems with predefined rules, scripted events, and fixed logic. When players visit a bank in GTA and trigger a robbery, or squeeze a trigger for a specific damage output, these outcomes are precisely coded. Multiplayer games like Fortnite require 100 clients to agree on the same game state, frame by frame — a requirement that demands absolute consistency.
World models like Genie operate on fundamentally different principles. They’re probabilistic, meaning the next frame is inferred rather than scripted. Neither the player nor the developer knows exactly what will happen until it does. This makes them poorly suited for traditional games, Lai notes. The generations also have latency issues, are computationally expensive, and remain difficult to control in their current form.
However, Lai identifies unique strengths that world models possess: deep personalization, an infinite canvas for creation, integration with coding and creative agents, and a radically lower barrier to entry for new creators working with a blank slate.
Rather than forcing world models into existing game formats, Lai envisions a new storytelling medium built around these strengths. He imagines Dune fans stepping into Arrakis to retrace Muad’dib’s journey, Game of Thrones enthusiasts creating alternate endings with friends, and niche literary genres like Lovecraftian romance or alternative military history exploding into mainstream pop culture. He sees opportunities for 100 million-plus fan fiction writers to build worlds that illustrate their rich imaginations, and film students breaking out with immersive documentaries about exotic places and people most viewers will never visit in person.
“We’re just at the beginning of this journey,” Lai writes. “Models are improving quickly. Control layers, editing workflows, creator tools still need to get built – but they will come.”
Lai believes there’s a rare opportunity emerging for the right team — one that blends creatives and technologists — to build “a Pixar for this new storytelling medium.” Just as Pixar unlocked new types of stories through computer graphics, he argues, world models and interactive video could unlock a new category of interactive experiences we can’t yet fully predict.
The thesis suggests that the January 30 stock market sell-off in gaming companies may have been premature. Rather than viewing Genie 3 as a direct competitor to traditional game development, investors might need to consider it as the foundation for an entirely separate entertainment category — one that could expand the market rather than cannibalize it.