Morgan Stanley: AI Could Halve Game Dev Costs, Add $22B Profits

Advanced artificial intelligence tools could slash video game development costs by nearly half, potentially unlocking up to $22 billion in annual profits for the global industry, according to a report from Morgan Stanley analysts.

The brokerage, in a note released Tuesday, outlined how AI adoption for automating key tasks such as building gaming environments, generating character dialogue and testing software could shorten production timelines and lower expenses. This streamlining would enable smaller development teams and quicker post-launch updates, gradually improving profit margins. Morgan Stanley projects global consumer spending on video games to reach $275 billion this year, with about 20 percent, or roughly $55 billion, allocated to development and operations.

Game development has long been a costly and labor-intensive process, often spanning years for major titles. A prime example is Take-Two Interactive's Grand Theft Auto VI, one of the most anticipated releases in the industry. Development began around 2018, five years after the previous entry, Grand Theft Auto V, and the project now faces a November 2026 launch following several delays. Such extended cycles highlight...