How does Genie 4 improve on its predecessor?

  • Google DeepMind released the interactive world model Genie 4 on 27 October. Compared with its predecessor, it supports shaping simulated worlds in real time, improves the realism of physical effects and human movement, and can generate native audio in real time.
  • The model combines Gemini Omni with other Gemini models: the former helps simulate appearances and behavior close to those of the real world, while the latter provide complex reasoning to maintain scene coherence and continuity. Gemini 3.8 Flash is also used to simulate complex events.

Why does this affect the direction of Chinese video models?

  • Citi believes interactive world models will become an important direction for video generation models. Applications could expand from today’s short dramas, video advertisements, long-form dramas and films to interactive entertainment such as online games, as well as creative direction, immersive photography and robotics simulation.
  • This path remains at an early stage: even frontier models face limitations including insufficient coherence in long-running scenes, difficulty editing, high computing costs, understanding complex physical interactions, and real-time spatial and audio accuracy.

How do the positions of ByteDance and Kuaishou differ?

  • ByteDance’s Seed team views video generation as one of the important paths toward world models. Citi believes the leading Seedance model, combined with foundation model capabilities, could give ByteDance an advantage in this field.
  • Citi believes Kuaishou can also explore world models through Kling AI, but its relatively limited foundation model capabilities could be a constraint. The bank maintains a Neutral rating on Kuaishou with a target price of 41 Hong Kong dollars.
  • Of the target price, 21 Hong Kong dollars reflects the core business valued at 6 times expected 2027 earnings; another 20 Hong Kong dollars comes from Kuaishou’s stake in Kling, based on the valuation in Kling’s latest private funding round and incorporating a 20% discount for the stake. Slower-than-expected Kling revenue growth or higher-than-expected AI investment are among the downside factors cited by Citi.