NVIDIA has dominant revenue and profit share in the market for discrete graphics chips. Image credit: NVIDIA.
One reason that graphics specialist NVIDIA (NASDAQ: NVDA), which makes much of its revenue from the sale of graphics processors that go into personal computers, continues to largely defy declines in the PC market is that PC games continue to become more demanding over time.
This means that there is a substantial incentive for PC gamers to upgrade their graphics cards at relatively zippy clips, something that isn't the case among "non-gamers" who own PCs to perform basic functions such as word processing, Internet browsing, and light productivity applications.
NVIDIA CEO Jen-Hsun Huang said on the company's most recent earnings call that "what drives the gaming market is great games."
There's one game coming up that I think has the potential to catalyze a fairly nice wave of upgrades among the gaming PC installed base: id Software's DOOM.
DOOM could be quite popular...and it's apparently very demandingDOOM, which is expected to launch on May 13, is the long-awaited "reboot" of the popular DOOM series of video games, a franchise that is widely credited with popularizing the first person shooter genre.
Although reception to the most recent installment in the series, DOOM 3, was mixed (some loved it, others were disappointed that it deviated so much from the style of the original 1993 DOOM and its 1994 sequel, DOOM 2), the game was clearly a commercial success, reportedly selling about 3.5 million copies back in the day, per former id Software CEO Todd Hollenshead.
Given what id Software has shown of the game, as well as the sheer brand value of the franchise, I think that the new game could be quite popular among the gaming community, and in particular PC gaming, since the franchise was born on the PC.
id recently released the minimum and recommended system requirements for the PC version of the game, and it's looking as though it will be demanding.
The developer says that in order to run the game smoothly at the relatively low resolution of "720p," the NVIDIA graphics chip needed is the now-four-year-old GTX 670 (about equivalent in performance to a modern $150 GeForce GTX 950) . To run the game smoothly at "1080p," id says that a roughly $330 GeForce GTX 970 is "recommended."
Why this could benefit NVIDIAQuite often, I have noticed that what prompts many within the PC gaming community to upgrade to new hardware is an exciting new game that won't run, or won't run well, on their current hardware.
There are a lot of games out there that require substantial hardware to run, so it's likely that a solid portion of the gamers who will want to play the new DOOM have already upgraded in order to be able to play other games.
However, given the fairly high requirements of the game (particularly the "recommended" ones), and given that this is likely to be a very high profile release, NVIDIA could benefit from upgrade activity ahead of the game's launch as well as during the initial availability of the game (as some gamers buy the game but potentially find that their systems can't run it well).
The article What DOOM Could Mean for NVIDIA Corporation originally appeared on Fool.com.
Ashraf Eassa has no position in any stocks mentioned. The Motley Fool recommends Nvidia. 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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