Global chip shortage and demand for home entertainment options in the aftermath of the pandemic remain strong
Microsoft (+1.44%) and Nvidia (+0.38%) likely to be key beneficiaries of shift towards cloud-based gaming
Looking to score a PlayStation 5 or the Xbox Series X? No problem if you’re willing to pay as much as ten times the retail price.
With pandemic-induced demand outstripping supply and when much of the world was in lockdown, scalpers hoarded PS 5s and Xboxes, holding gamers to ransom globally.
A global chip shortage isn’t helping matters either.
Microsoft may have a solution, with its Xbox gaming unit working on deals with TV makers that will let consumers play games and experience the Xbox in its full 4k glory without ever needing to stand in line to snag an actual XBox in person.
After all, we stream music, videos and content, why don’t we stream video games as well?
Part of the issue of course is (as any gamer will tell you) frames win games – the refresh rate or framerate of a video game could make the difference between a shot landing and you winning a Battle Royale, or you getting shot instead and there’s only so much that can be processed through the internet.
Key to keeping those frames up is powerful hardware and a strong internet connection, which affects the ping or lag of a game.
Microsoft’s proposed solution is to embed the Xbox experience directly into an internet-connected TV with nothing needed apart from a video game controller.
Xbox is also working on streaming devices that would enable cloud gaming services on “dumb” TVs or any monitor as well.
Cloud-based gaming could both boost and smooth revenue at Microsoft, by getting more customers to buy-in to video game subscriptions, the company could unlock an entirely new segment of the market – casual gamers who aren’t willing to shell out the hundreds of dollars to invest in a new console.
And just like how companies make more money by selling you the razer blades than the razer itself, Microsoft revealed that subscribers of its Xbox Game Pass service are already buying far more content beyond their monthly subscription, spending up to 50% more on extra games and downloadable content.
The shift towards subscription-based gaming could provide a huge bump for companies like Nvidia as well, whose graphics processing units are now incredibly elusive due to a global chip shortage and possibly even out revenues for the chipmaker in the long run as well.
Nvidia is working on cloud-based GPUs, that could one day level the playing field for gamers who may not have thousands of dollars to shell out for high-end silicon and could support an entirely new industry – where investors pay for GPUs sitting in the cloud to provide gaming services to gamers everywhere.
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