NVIDIA – Forced out.

GeForce Now is in real trouble.

• It appears that streaming games is harder than it looks as Nvidia’s service, like Google Stadia, is in the kind of trouble that could threaten its very existence.
• Nvidia managed to avoid most of the mistakes that Google made when it launched Stadia by announcing a very different proposition as well as not hyping it to the rafters.
• The result is a service that broadly performs within the expectations that Nvidia set for it but still the games developers are deserting the service in droves.
• Nvidia GeForce Now service is very different from Stadia as it does not offer games for sale or rent but merely enables the streaming of games that users already own to all of the user’s devices.
• For this added flexibility, Nvidia charges $4.99 a month which enables integration with the Epic Games Store as well as Steam meaning that games limited to the PC can now be played anywhere.
• This sounds like a great proposition, but a large number of developers have withdrawn their support for the service meaning that their games return to being effectively locked to the PC.
• 2K, Square Enix, Capcom, Activision Blizzard and Bethesda have all pulled their games from the service but none of them has said why.
• 2 big hold outs are Ubisoft and Epic Games, the latter of which has been highly vocal of its support for the service.
• This is largely because the service does not charge developers anything to be part of it and I have written several times about Epic Game’s long-running battle with the app stores (see here).
• I suspect that the reason why everyone is bailing on NVIDIA is, as always, money.
• By making a game that a user has purchased on a PC playable on a smartphone, the service may have prevented the sale of a smartphone version of the game, thereby depriving the developer of revenue.
• Hence, I suspect what the developers are after is a cut of the $4.99 subscription fee, but this is going to make life very difficult of NVIDIA.
• The $4.99 pays for the cloud infrastructure that hosts and runs the games as well as the system that connects the service with the Epic Games Store and Steam.
• At $4.99, I seriously doubt that Nvidia is making much, if any, margin and so reducing its take will be a tough call.
• Hence, NVIDIA faces a difficult choice which is to go further into the red to bring the developers back or give up on the whole service.
• With both Google and NVIDIA in real trouble with their streaming services, the way remains open for Microsoft and Sony to extend their console dominance into this segment.
• With a new hardware generation on the way that is likely to be pretty expensive, this would be a good way to keep the current generation going for longer as well as expanding the base of subscribers.
• Apple’s games service is limited to iOS devices and so this is unlikely to have any real impact beyond its own ecosystem.
• Hence, I think that this segment is now wide open for Microsoft and Sony to dominate.
• I would rank Microsoft above Sony which has a horrible history of making a real mess of these sorts of services, but it is unlikely to make a bigger mess than Google has.
• I remain uninterested in the equity market in general at the moment which despite the sea of red as only given back the last 12 months of performance.
• There could be much further to go.
• The economic uncertainty is growing as more and more countries take preventative actions that will hurt their economies.
• Until there is some visibility on what the panic will do to the relevant economies, I am staying out.