Google last week generated buzz with a new AI tool called Project Genie, which enables users to create and play in virtual worlds like ultra-realistic videogames. An upstart Chinese competitor that recently announced a similar product is trying to keep up with Google and capture some of that buzz.

PixVerse, which a few weeks ago unveiled its “real-time world model” called R1, a competitor to Google’s Project Genie, is already preparing to roll out an update next week that adds new features to the R1 model, according to a person with knowledge of the plan. The three-year-old startup, backed by Alibaba Group, is also close to completing a new $200 million funding round at a valuation of over $1 billion without the new capital, according to two people with knowledge of the matter.

The recent moves by Google and PixVerse suggest that 2026 will be a big year for world models, which simulate real-world environments and aim to approximate the physics of how objects move and humans interact with the surroundings. World models could revolutionize video games and other online content. Simulated environments and scenarios created by such models could also help accelerate the development of intelligent robots and self-driving cars.

Other tech giants in the U.S. and China, such as Meta Platforms, Nvidia and Tencent Holdings, are also in a race to develop more capable world models. The Information last year reported that ByteDance is also working on such models.