Generate a sprite in an image editor, then use a video model to make the loop you want; then turn the resulting video back into individual sprite images.
I can still get absolutely insane results with MiniMax H3 - insane in the sense that it would not make sense at all and would make your head spin.
That paper sets up a task where generating a correct video requires correctly modeling physical laws. From the failure to always generate the correct video, they infer that the model has failed to correctly model the physical laws. The whole premise of the experiment is that learning visual statistics is equivalent to learning causal dynamics, such that failure at one implies failure at the other.
The main difference in applications is that the bar for entertainment is lower, so that even a very bad world model may be acceptable.