Google DeepMind's artificial intelligence (AI) game-making model Project Genie 3 has sent shockwaves through the global gaming industry, and major South Korean game companies have rolled out strategies to respond. They say AI is unlikely to replace the game industry in the short term. They plan to use it instead to streamline development and expand into new businesses.

NCSoft, Krafton and Kakao Games presented specific response measures to analysts' AI questions during conference calls on their 2025 fourth-quarter earnings. After Genie 3 was unveiled and global gaming stocks fell sharply, South Korean game companies formalised their own strategies while pushing back against concerns about AI as a threat.

NCSoft "market overreaction... difficult for AI to make AAA games"

Park Byung-moo (박병무), co-chief executive of NCSoft, said Take-Two, Unity and NCSoft shares fell sharply after Project Genie 3 was released. He said a review concluded the market was overreacting.

Park cited the difficulty for AI to produce AAA games end to end. He said they require sophisticated systems and users show resistance to AI-written art or characters. "AI can help boost productivity, but it cannot immediately make a game like GTA6," he said.

NCSoft will run a company-wide task force this year to boost productivity using AI. It plans initiatives to improve productivity across the company by combining its own AI with open-source AI, as well as in game development.

On its mobile casual business, it said AI is an area where content can be made easily. It also said NCSoft aims for a tech platform that builds an ecosystem rather than continuously producing games, and that having more games come out is advantageous.

Krafton "acknowledge disruptive technology... protect core business while seeking new opportunities"

Krafton offered the most detailed AI strategy. Kim Chang-han (김창한), Krafton's CEO, described AI as a key driver of the company's future innovation and value expansion in the earnings release.

Krafton's AI strategy has two pillars: "AI for Game" and "Game for AI". It aims to improve game service quality through in-game AI, production efficiency, QA automation and anti-cheat. It also plans to extend game data and simulation capabilities into the real world to create medium- to long-term opportunities.

Kim said interaction data in games can become high-quality training data. He said experience in operating physics-based virtual worlds is an advantage in building learning environments and data production infrastructure. The plan is to validate through internal application in the short term and link it to external expansion in the medium to long term.

On Genie 3, Kim said he agrees AI technology is bringing disruptive change to work and business. He said it cannot fully replace games in the short term because it requires significant GPU capacity and has a short duration.

Bae Dong-geun (배동근), Krafton's chief financial officer, said using AI could allow the company to handle simple art assets internally rather than outsourcing them, and in the long term reduce outsourcing service costs compared with the past.

Kakao Games "structural change within 2 to 3 years... prepare on both development and service"

Han Sang-woo (한상우), CEO of Kakao Games, said advances in AI technology will bring very large structural changes to the industry within 2 to 3 years. He presented preparation for that as a major strategic task for the company.

Han explained the AI response direction by separating development and service. On development, he said various solutions already available will greatly improve development efficiency within 2 to 3 years, and the company is preparing to adopt them by studio and by genre.

On the service side, he said the entire operating process, including marketing, decision-making and data-based analysis, will become more sophisticated and efficient. He said the strategic keyword is organisational and technological preparation to respond to industry structural changes by incorporating newly evolving AI technologies in both development and service.

Kakao Games said it has spent the past 2 years preparing AI tools and solutions and has built internal solutions that can streamline staffing. Cho Hyuk-min (조혁민), Kakao Games' CFO, gave a specific figure, saying the company plans to keep personnel costs controlled to an increase of around 5 percent from the 2025 fourth-quarter level even if it selectively strengthens development staffing.

Industry "efficiency tool rather than threat... used as a cost-cutting measure"

Major game companies have shown a shared view that AI is unlikely to replace high-quality games immediately, but can be used as a tool to improve efficiency across development and operations.

All three plan to integrate AI into game production and service processes to cut costs and secure competitiveness. NCSoft and Krafton are operating company-wide AI organisations, while Kakao Games is fully launching solutions prepared over 2 years. They are also reviewing ways to expand AI capabilities accumulated in games into new businesses over the medium to long term.

South Korean game companies' AI strategies appear to pursue defence and offence at the same time. They stress the importance of existing development capabilities while aiming to boost competitiveness by using AI as a cost-cutting measure. Some companies' review of entering new businesses using game data is assessed as an attempt to turn AI from a simple threat into a growth opportunity.

An industry official said generative AI could change development methods, but it is difficult to make large-scale online games or complex systems in the short term. The official said it is realistic to use it in a direction that reduces repetitive work and improves efficiency.