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Why Cloud Gaming will disrupt hardware manufacturers - Opinion Post


4 min read
Why Cloud Gaming will disrupt hardware manufacturers - Opinion Post

So let me begin by saying that this post is based on my opinion, and is by no means wholly accurate or what will happen. This is a thought that has crossed my mind, and I would like to talk about it in a post for you guys!

As you probably have seen by the title of this post, I will be discussing why I think Cloud Gaming will affect hardware manufacturers. Specifically, GPU manufacturers.

So, let us get started.

Cloud Gaming

So, if you do not know what Cloud Gaming is, it is the ability to play games that are streamed directly to your computer. Companies like Google and NVIDIA allow you to stream the game directly to your computer, and companies like Shadow give you a fully functional gaming PC in the cloud.

You can play more demanding games on pretty much any hardware, as long as the device can handle the stream from the platform you selected.

This is where I think hardware manufacturers/distributors may take a hit.

Gaming and the demand for GPU's

So, if you are an avid PC gamer, you may know that if you want to play games, you will need a Graphics Card that is strong enough to run the game. Depending on the game, this can be a relatively cheap GPU, or you may need to splurge on more expensive GPU's if you are a 4K or high FPS gamer.

Games being developed with the need for these high powered GPU's keep the need of upgrading your PC every few years a standard, and sometimes a necessity. For example, when NVIDIA released the RTX GPU's and introduced RTX to the PC Gaming community, many people upgraded their PCs to allow them to take advantage of RTX capabilities in their games. As more games support RTX, more people will upgrade to an RTX compatible card.

This keeps the demand high, pushing GPU manufacturers to produce more and develop stronger cards.

Enter Cloud Gaming

So, you have the idea that as games get more graphically demanding, you need to keep updating your GPU to keep up with these games.

But then something called Cloud Gaming enters the scene, and you can play these graphically demanding games on your phone, tablet, and computers with integrated GPUs.

I use Shadow on a laptop with a 6th generation dual-core i5 processor with an iGPU. This allows me to play games such as Final Fantasy XIV and Monster Hunter World without building a new gaming rig. The best part about it is that it costs me $12.99 a month.

This means that I can continue gaming on devices that can run the Shadow Client without upgrading or buying a new computer. I can keep playing my favorite games as long as my laptop continues to turn on.

This ultimately saves consumers money and brings a more budget-friendly platform for gamers to get into the PC gaming scene.

Cloud Gaming Datacenters and the need for GPU's

Now, Cloud Gaming may affect the need for upgrading their computers, but the Datacenter's running in the backend of Cloud Gaming platforms do still need GPUs. So, if you want to argue that Cloud Gaming will adjust where the money is coming from, you are not entirely incorrect.

But, the significant difference between a GPU used in a Cloud Gaming Datacenter and the GPU used in a person's gaming rig is that multiple people will use the Cloud Gaming GPU.

For example, Shadow's lowest-tier plan, Shadow Boost, uses a Quadro P5000. The MSRP of the Quadro P5000 is around $2500. The consumer equivalent to the Quadro P5000 is the NVIDIA GTX 1080, which MSRP's at about $600. Granted, these cards are a little outdated and hard to find, just taking the example of these two card prices, you can see that each Quadro P5000 is equal to four GTX 1080s.

As long as Shadow has more than four people using each of their Datacenter GPU's, which is highly possible, NVIDIA is technically losing out on Gross GPU sales.

Now the profit margins on the Quadro Cards may be higher than that of the GeForce cards, so actual numbers may vary, but I think I gave a decent example.

GPU Manufacturers need a role in Cloud Gaming

I think GPU and hardware manufacturers must get into Cloud Gaming. NVIDIA has already taken this step with their GeForce Now platform. They also have a partnership with Shadow in Europe for the new Ultra and Infinite tiers.

AMD has a partnership with Google for the custom Stadia GPU used in the Google Stadia platform.

As we can see, the two major GPU manufacturers are already in the Cloud Gaming scene, which is good. Still, hardware manufacturers that purchase boards from AMD/NVIDIA will need to keep an eye on the possible changing of demand for their cards. Many companies like Asus, Gigabyte, and MSI have their hands in other markets, so they may not take a huge hit, but those companies that rely on their GPU sales may need to be careful.

Conclusion

This is my opinion on how Cloud Gaming will affect the computer hardware industry, specifically GPU manufacturers.

What are your thoughts on this? Do you agree, or do you think Cloud Gaming will not affect the market for GPUs?

It would be interesting to know what others think about this.


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