ChatGPT and AI could be the Bane of GPU Supply | The Growing Pains (and Winners) of Cloud Gaming

the gaming tap


Source: Nvidia
Source: Nvidia

ChatGPT and AI Could be the Bane of GPU Supply Nvidia's pivot away from gaming leaves openings for AMD and Intel

The likes of Google and Microsoft are betting on AI being the next great technological leap forward. Tools like ChatGPT, which are trained and powered by GPUs, have captured popular attention in a way tech rarely does. This increased investment in AI could potentially disrupt the GPU industry and negatively affect gaming video card supply in the future. 

Sibling Rivalry
It’s important to note Microsoft isn’t hoarding RTX 40 series GPUs for ChatGPT development. Rather, AI applications generally rely on data center GPUs. In the case ChatGPT’s beta version, developers Open.AI reportedly used 10,000 Nvidia A100 GPUs.

  • ChatGPT’s next iteration is reportedly being trained on 25,000 GPUs.
  • Mass deployment of ChatGPT – let alone its competitors – would require millions of GPUs.
Despite being designed for vastly different customers, data center GPUs still compete with gaming GPUs. Nvidia’s latest H100 data center GPUs are manufactured on the same TSMC production lines as its RTX 40 series cards. They also have noticeably larger GPU dies, meaning that they require raw materials than their gaming counterparts. 
  • The H100’s 814 mm² die dwarfs the huge (by gaming standards) 608 mm² die of the RTX 4090.
  • The older A100 data center GPU’s 826 mm² die is about twice as big as the mainstream RTX 3060.
Nvidia’s Bet Pays Off
From Nvidia’s perspective, data center – not gaming – GPUs are the future. The company has already heavily pivoted toward non-gaming customers like Microsoft and ChatGPT in recent years, and it’s paying off. Gaming revenue peaked for Nvidia in Q1 FY 2023 at $3.6 billion (46% of revenue); that same quarter, data center revenue overtook it ($3.8 billion). When asked about ChatGPT during a recent Q&A, CEO Jensen Huang spoke in glowing terms about AI's potential.
  • Data Center revenue was more than double gaming revenue for Q3 2023, its most recent quarter.
Unless future game consoles opt for Nvidia chips, Nvidia will likely never be a gaming first company again. And it’s hard not to blame Nvidia: Why sell products that go for a couple thousand dollars when you have multibillion dollar companies willing to pay 10 times that for a data center GPU?

This has major implications for gamers. For example,  Nvidia shifted some of its TSMC RTX 4090 orders to H100 orders last year, likely in an attempt to sell as much before US chip restrictions for China kicked in.

An Opening for Intel and AMD
It’s not all bad news for gamers. Nvidia’s pivot toward non-gaming products is driven by its substantial technological edge over competitors. Any demand for gaming GPUs that Nvidia leaves unmet presents a golden opportunity for Intel and AMD to grow their market share while playing catchup in the data center segment. 

  • TSMC also currently has excess capacity as the likes of Apple and Nvidia reduce their orders during the economic downturn.
  • US restrictions on China’s import of chips also limits the market for data center GPUs.

-Avery Bissett, Head Writer



Source: Microsoft
Source: Microsoft

The Growing Pains – and Winners – of Cloud Gaming UK report also indicates crossplay doesn't significantly improve matchmaking times 

The UK Competition and Markets Authority’s (CMA) recent report on the Microsoft's pending acquisition of Activision Blizzard didn't just contain the blockbuster suggestion that Microsoft break up the latter. Reading between the lines and redactions, the CMA report offers considerable insights into some of cloud gaming's challenges, as well as the best positioned competitors.

Growing Pains
The report includes several interesting revelations from cloud gaming providers. The most eye-catching figure is that xCloud’s share of monthly active users at least doubled from 20%-30% in 2021 to 60%-70% in 2022. Looking ahead, the report confirms that at least one major company is considering an expansion into cloud gaming.

The CMA also provided additional information from current cloud gaming competitors, albeit with redacted identities. We can, however, make educated guesses on which companies admitted what.

  • Shooters Are Selling: Multiplayer and “fast-twitch games” are among the most popular games for one service. (Page 185)
    • This unnamed service, which upgraded its GPUs and highlighted better-than-console latency, sounds like Nvidia's GeForce Now. The company has often talked up GFN's latency and upgraded its servers in 2021 and 2023 to RTX 3080 and RTX 4080 equivalent GPUs.
  • xCloud Revenue: A March 2022 third party report estimated xCloud’s 2021 revenue at under $50 million. (Page 197)
    • If accurate, xCloud was less than 4% of Xbox’s Content and Services revenue in 2021.
  • License Fees: One cloud gaming service is paying $10 million per licensed AAA game. (Page 251)
    • The surrounding context suggests this competitor is Amazon Luna.
If there’s a major gripe when it comes to cloud gaming, it's dealing with startup costs like Microsoft Windows fees or cloud infrastructure.
  • Best in Class: The report suggests that Nvidia has the lowest server operating costs due to its use of its own GPUs. (Page 212 & 222)
  • Windows Isn't Cheap: One competitor saw its streaming costs per hour double when it prototyped its service with Windows. (Page 201)
    • This could be the now-departed Google Stadia, which notably used Linux.
Game Subscriptions Reduce Game Purchases
Microsoft also surprisingly admits that Game Pass cannibalizes traditional game sales, suggesting that gamers are increasingly gravitating toward the subscription model. For early adopters of cloud gaming– like manufacturers who bundled game subscriptions with their desktops and laptops – this is a sign that their bets may be paying off
  • This also seems to directly contradict Xbox head Phil Spencer’s prior claims that Game Pass boosts overall game sales.
Crossplay Doesn’t Boost Matchmaking Speed
One of the most universally popular gaming innovations in recent years has been crossplay between different platforms. For example, PC players on Call of Duty are no longer isolated from the majority of COD’s player base on console. While the CMA’s report confirms crossplay is becoming more popular on Xbox, it concludes that crossplay does not significantly improve matchmaking times. 

-Avery Bissett, Head Writer


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Supply Drop: Games & Players

Upcoming Games (February 17 - 23)

(36) PSVR 2 launch titles – PlayStation
Aces & Adventures – PC
Atomic Heart – PC, PlayStation, Xbox
Blood Bowl 3 – PC, PlayStation, Xbox
Chef Life: A Restaurant Simulator – PC, PlayStation, Xbox, Switch
Company of Heroes 3 – PC
The Dreams in the Witch House – PC
Gigantosaurus: Dino Kart – PC, PlayStation, Xbox, Switch
Like a Dragon: Ishin – PlayStation
Ninja JaJaMaru: The Great Yokai Battle+Hell Deluxe Edition – PlayStation, Switch
Ninja JaJaMaru: The Legendary Collection – PlayStation, Switch
Ninja JaJaMaru: The Lost RPGs – PlayStation, Switch
Planet Cube: Edge – PC, PlayStation, Xbox, Switch
Sons of the Forest – PC
The Settlers: New Allies – PC
Tales of Symphonia Remastered – PlayStation, Xbox, Switch
Wild Hearts – PC, PlayStation, Xbox

Most Anticipated: Virtual Insanity. PlayStation is officially releasing its PSVR 2 headset next week, along with 36 launch titles. The headset is Sony's second generation VR platform, and it debuts in a much different environment than its predecessor did in 2016. The $549 PSVR 2 will be competing against products like the $499 Meta Quest 2, a system that once had to be tethered to a high-end gaming rig.

PlayStation is offering a huge library of game options at launch, including existing PS5 games that will have free upgrades to PSVR 2 compatibility. What may help set Sony's offering apart from competition will be, as usual for the console maker, exclusive game titles. Here are the most notable ones:

Horizon Call of the Mountain: A spinoff from the PlayStation exclusive series will focus on climbing and archery mechanics as players explore the world made famous by Aloy in Horizon Zero Dawn.

Gran Turismo 7 (PSVR 2 upgrade): A staple of the racing game genre since 1997, the PS exclusive will receive a free update to support PSVR 2. Allowing many die-hard racing fans to finally complete their immersive wheel and pedal home setups.

Resident Evil Village (PSVR 2 upgrade): While not a PS exclusive, a free update to PSVR 2 will make the PS5 the first system to allow players to step into the shoes of Ethan Winters and experience the evil that resides in this mysterious village first hand.

-Dustin Downs, Editor


Comms: Social Campaigns

Source: Twitter
Source: Twitter

The Tap: News to Go

  • GPU: Best Buy, the exclusive US distributer of Nvidia's RTX 30 series reference cards, heavily discounted its RTX 30 Founders Edition GPUs on Wednesday. The steep discounts, which included a price cut to $419 for the RTX 3080 10GB, suggests that midrange Nvidia RTX 40 series GPUs are right around the corner. (Courtesy of Tom's Hardware) 
  • Games: Chinese regulators approved another 87 new game licenses in February, bringing 2023's total up to 175 titles. This is almost one-third the number of games regulators approved in 2022, suggesting the Chinese gaming market could rebound this year. (Courtesy of South China Morning Post)
  • Industry: Popular benchmarking platform Geekbench is rolling out its first major upgrade since 2019. Geekbench 6 will better highlight performance in machine learning, as well as other real world metrics. Non-commercial use will be free, with the Pro version being $79 at launch ($100 after). (Courtesy of The Verge)