Nvidia’s Crypto Bet Blows Up | Unity Partners with Microsoft

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Analyst Opinion Nvidia’s Crypto Bet Blows Up

Who knew neglecting your core business would backfire?

Source: Nvidia
Source: Nvidia

In a development that no one could have seen coming, Nvidia’s short-sighted decision to alienate core customers and bet on volatile speculation has caught up with the discrete-GPU (dGPU) leader. The company announced Monday that gaming revenue for Q2 FY 2023 collapsed 33% year-over-year.

If founder and CEO Jensen Huang is to be believed, Nvidia got unlucky with “macroeconomic conditions.” That’s technically true: a war in Ukraine and inflation certainly doesn’t help sales. But Nvidia’s current predicament is primarily one of its own making, the result of betting on cryptominers. (Coincidentally, crypto is not mentioned once in the press release.)

The gaming industry is hitting a rough patch, but not so rough a patch that Nvidia’ dGPU revenue for Q2 (which includes summer gamers and Amazon’s Prime Day) would plummet 44% from the previous quarter. The part that the company doesn’t want to admit is this collapse is driven by the crypto crash. The company was even fined earlier this year for not being forthright with the extent crypto was fueling gaming revenue.

Worse, it’s a crash the company had to know was coming since Ethereum is transitioning to a proof-of-stake model, which eliminates the massive demand from miners. Throughout all this, Nvidia ignored customers pleading for the company to crack down on scalping and stop cryptominers from snapping up video cards. It now finds itself trying to help board partners offload RTX-30 series inventory that gamers gave up on buying, just so these partners buy upcoming RTX-40 inventory

To be fair, there is some good news.

  • Gamers are finally seeing discounts on two-year old products
  • Nvidia promised its employees that it has no layoffs planned (for now)
    • It’s a promise the company might regret since Huang is promising to make Nvidia “even faster, leaner, and agile”

The real test, however, will be when Nvidia rolls out its next generation of video cards. Will it finally crack down on scalping? Will Nvidia, now that the crypto high is over, put effort into getting back the customers it’s treated so shabbily? Only time will tell, but in the meantime a little candor from Nvidia’s leadership wouldn’t hurt.

Game Subscriptions Intel’s GPU Growing Pains

Where does Intel go after even more setbacks?

Source: Intel
Source: Intel

Unity has selected Microsoft’s Azure cloud computing service as the game engine’s cloud partner for real-time 3D experiences. The partnership will not only make Unity’s offerings more appealing to game devs, but also potentially help attract more developers to the Microsoft ecosystem, and ultimately Game Pass.

Hand in Glove

“By giving creators easy access to RT3D simulation tools and the ability to create digital twins of real-world places and objects, Unity is offering creators an easy path to production of RT3D assets, whether for games or non-gaming worlds.” -Sarah Bond, CVP of Game Creator Experiences & Ecosystem at Microsoft
This partnership doesn’t upend the gaming landscape when it comes to game engines, but it does make it easier for Unity users to scale up their projects, particularly when working remotely.
  • Unity is more popular with non-AAA titles
  • The company has also branched out of gaming
    • It signed a partnership with concert promoter Insomniac Events in March
    • Just signed a deal with Mercedes-Benz

The upside for Microsoft here is quite clear: It makes Microsoft platforms that little bit more enticing for smaller developers. The kind of developers whose titles are what would fill out a game subscription service, like Microsoft Game Pass.

Big Picture: It’s a preemptive move to make sure Game Pass stays ahead of Sony’s revamped subscriptions.

Copying Netflix’s Homework
Microsoft is planning a “family plan” feature for Xbox Game Pass Ultimate. Players will be able to share their subscription with up to four other people. It would, however, cost more than the normal Ultimate membership.

  • Game Pass Ultimate ($15/month): Includes Xbox cloud gaming
  • Family plan is currently $25/month
    • It’s being trialed in Ireland & Colombia
Reading in between the lines, this change – something that streaming services are usually reluctant to do – suggests Microsoft may be feeling a little impatient with subscription figures. Its most recent quarterly financials showed softening revenue and engagement, even as Game Pass subscribers increased (but not enough to reveal exact figures). And with game development pipelines still backed up from the pandemic, subscriptions growth has become that much more important.

Supply Drop: Games & Players

Upcoming Games (August 11 – August 18)

Backpack Hero – PC
Blossom Tales 2: The Minotaur Prince – PC, Switch
Catizens – PC
Cursed To Golf – PC, PlayStationXboxSwitch
Marvel’s Spider-Man Remastered – PC
Rollerdrome – PC, PlayStation
RPG Time: The Legend of Wright – Switch
Tribes of Midgard – XboxSwitch
Voyage – PlayStationXboxSwitch
Way of the Hunter – PC, PlayStationXbox

Comms: Social Campaigns

  • iBUYPOWER promotes customs builds in conjunction with Intel and Windows on August 11 (FB, IG)
  • Razer promotes its mobile controllers with coupon code on August 10 (FB, IG)
  • AMD promotes inclusion of 3 free games (Halo Infinite pictured) with purchase of Radeon RX 6000 Series GPUs on August 10 (IG)
  • Intel promotes #CreatorChallenge campaign in conjunction with Elden Ring, Fall Guys, Apex Legends, & Team Fight Tactics on August 9 (FB, IG)
Source: Facebook Ad Library
Source: Facebook Ad Library
Source: Facebook Ad Library
Source: Facebook Ad Library

The Tap: News to Go

  • Streaming: YouTube announced YouTube: Game On, its first “interactive gaming live stream” for Saturday, August 27. It will showcase over 60 content creators, with viewers having the opportunity to participate during the stream by voting. Games will include, Among Us, Fall Guys, Fortnite, Mortal Kombat, and more.
  • Video Cards: Intel has offered a sparse update on its trouble Intel Arc GPU launch. The company is claiming to be still be committed and showed off its flagship Arc A750 card, but timelines and details remain vague
  • PC Gaming: Steam is finally rolling out its long-awaited support for Nintendo Joy-Con controllers. The feature entered beta on August 5.
  • Mobile: In a sign of improved supply, Steam is opening up Steam Deck reservations for Japan, South Korea, Hong Kong, and Taiwan. Previously, it was only available in the US, UK, and some of Europe.
  • Mobile: Game Vice has announced its Gamevice Flex mobile gaming controller, with its selling point being its adaptability. It can be used on smartphones or tablets, without the need to remove cases. It is priced at $99 (Android)/$109(iOS).