Pandemic’s Explosive Gaming Demand Growth Here to Stay, Says Nvidia CEO
Nvidia’s gaming business finished Q2 “significantly ahead of our expectations,” said Chief Financial Officer Colette Kress on a Wednesday investor call. Revenue of $1.65 billion was up 26% year on year and a 24% increase sequentially from Q1, she said:…
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“The upside is broad-based across geographic regions, products and channels.” Gaming’s growth amid COVID-19 “highlights the emergence of a leading form of entertainment worldwide,” said Kress. The number of daily gamers on Steam, an online gaming distributor, is up 25% from pre-pandemic levels, she said. NPD reported U.S. consumer spending on videogames grew 30% in Q2 to a record $11 billion, she said. “We ramped over 100 new models with our OEM partners focused on both premium and mainstream price points.” In Nvidia’s “mainstream” segment, “we brought the GeForce GTX to laptop price points as low as $699,” she said. The explosive growth in gaming demand isn't temporary, said CEO Jensen Huang. The pandemic made gaming “the largest entertainment medium in the world,” he said. Huang thinks “this way of enjoying entertainment digitally has been accelerated as a result of the pandemic,” and it’s not “going to return” to pre-COVID-19 levels, he said. COVID-19 office closures dealt a significant Q2 blow to Nvidia’s professional visualization business, said Kress. Revenue in the segment was down 30% from the 2019 quarter and off 34% sequentially from Q1, reflecting broad-based demand declines in mobile and desktop workstations, she said. Work-from-home initiatives drove enterprise demand for Nvidia “virtual and cloud-based graphic solutions,” and Q2 bookings in those segments jumped 60% from the 2019 quarter, she said. The pandemic will have a “lasting impact on how we work,” said Kress. Nvidia’s revenue mix going forward “will likely reflect this evolution in enterprise workforce trends, with a greater focus on technologies such as Nvidia laptops and virtual workstations that enable remote work and virtual collaboration,” she said. Vehicle factory closures sent Nvidia’s Q2 automotive revenue tumbling 47% from the 2019 quarter and down 28% sequentially from Q1, said Kress. Factory production volume got progressively better in the quarter “after bottoming in April,” she said. Mercedes-Benz, starting in 2024, will launch “software-defined intelligent vehicles” across its entire fleet using Nvidia’s “full technology stack,” said Kress.