NVIDIA Wants to Be the Netflix of Video Gaming

NVIDIA is about to the enter the video game console market.

The chip maker has always been an integral player in the video game industry -- its graphics cards are extremely popular among PC gamers -- but it could soon become far more involved.

In May, NVIDIA will launch its Shield console, a $200 Android TV set-top box that packs enough power to play many of today's most demanding video games. More impressive than the actual device, however, is the service Nvidia plans to bundle with it -- a service that could, one day, make Nvidia the Netflix of video gaming.

NVIDIA's GRIDNVIDIA's console is capable of playing Android games locally, but it can also tap into its new service, GRID.

GRID is a cloud-based, video game streaming service that promises to deliver PC games over the Internet the day they launch. The game's graphics will vary in quality depending on the user's Internet connection, but GRID can deliver graphically intensive games in 1080p resolution at 60 frames per second -- a feat that both the Xbox One and PlayStation 4 often struggle with.

When the Shield debuts, GRID will offer some 50 games for unlimited streaming with the option to purchase other games individually. NVIDIA has not laid out exact pricing tiers, or the identity of all of its GRID-compatible games (it currently lists 30 on its website), but will undoubtedly add more as its service develops.

Will the Shield succeed?If the service is priced appropriately, it could make the Shield console a powerful alternative to both the Xbox One and PlayStation 4. In terms of up-front costs, a gamer could save $150-$200 by buying NVIDIA's Shield instead of a traditional console.

The Shield, however, will be limited to PC games -- that means no console exclusives like Uncharted, Halo, or Gears of War -- and it's unlikely to appeal to those with unstable or slow Internet connections. NVIDIA says a connection of 15 Mbps is capable of streaming games at high settings, but it recommends a somewhat beefy 50 Mbps.

GRID also works with NVIDIA's other Shield devices -- the 2013 Shield handheld, as well as last year's Shield tablet -- but it does not work with any other manufacturer's hardware. In time, that may change, as NVIDIA has demonstrated GRID on other devices in the past, including both the Nexus 7 and the HTC One X. That may be necessary for GRID to succeed. Netflix has always prided itself on its availability across a wide range of devices -- it's hard to imagine that Netflix would've caught on if it had it been limited to the company's own set-top box.

NVIDIA isn't alone -- and it could be putting its primary business at riskOf course, NVIDIA isn't alone in its quest to offer the Netflix of gaming -- Sony is also pushing in that direction withPlayStation Now.

PlayStation Now has the advantages of better brand recognition and exclusives -- unlike NVIDIA, Sony actually develops its own video games. But NVIDIA may have the better technology, as PlayStation Now only offers older, PlayStation 3 games in lower resolutions.

The other issue is that, while GRID is powered by NVIDIA's own chips, the company could ultimately cannibalize much of its business. If gamers decide they'd prefer to stream over GRID rather than play games locally on their PCs, NVIDIA could find itself selling fewer PC graphics cards, which last quarter generated more than 80% of its revenue.However, if GRID can attract enough subscribers, that may not matter.

There's still more questions than answers at this point, but for NVIDIA's stock, GRID has become one of the more exciting catalysts. NVIDIA shareholders should keep a close eye on GRID's roll-out later this spring.

The article NVIDIA Wants to Be the Netflix of Video Gaming originally appeared on Fool.com.

Sam Mattera owns shares of Nvidia. The Motley Fool recommends Apple, Netflix, and Nvidia. The Motley Fool owns shares of Apple and Netflix. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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