Business of Esports TV: From Crypto to Gaming

(Livestream #134)

In this segment, we discuss how NVIDIA is trying to move away from crypto in order to further embed themselves in the PC gaming space.

The Business Of Esports brings you news, debates, and all the information you need to know about the gaming sector, the world’s fastest-growing market. With Paul “The Profit” Dawalibi leading the charge, and a variety of special guests, BoE TV is the only place to find insider information on the esports industry!

Check out the full livestream here:

Paul Dawalibi 58:43
Alright guys, we have we can talk about NVIDIA. What are you guys interested in covering? Maybe do one more story here. And

Jimmy Baratta 1:00:01
more graphics cards because you know,

Paul Dawalibi 1:00:04
they are not the story though, but they are. Are you going to wait in line at best white tomorrow morning, Jimmy?

Jimmy Baratta 1:00:10
I would rather pay a premium then slit my wrists then wait,

Paul Dawalibi 1:00:13
what are those lines? But they are they are launching tomorrow the 3080 TI this article I just thought it was interesting because you know, crypto gets all the headlines these days in terms of mining and gaming cards and things like that. But this headline was NVIDIA sold 155 million in crypto mining chips last quarter. But PC gaming remains its biggest market. And the article goes on to talk about how they were expecting mining cards specifically. So they did 155 million last quarter. next quarter that they are thinking they’re gonna do 400 million, but their gaming business like the core gaming business GPUs for PC gaming generates in the same quarter 2.7 billion in revenue. So you know, you’re talking quite an order of magnitude larger than what they’re currently doing on crypto. I just thought it’s interesting, because again, you know, crypto gets a lot of headlines. And everyone says, you know, this is why you can’t get graphics cards right now. And because everyone’s mining and things like that. But I mean, people spent 2.76 billion on graphics cards in the last quarter, just to play games and not to mine. I think is interesting. I don’t know what where do you guys, where are you on on? Jimmy, you mentioned the shortage. Where are you on this? Like? Where are you on the hardware and video gaming business?

Jimmy Baratta 1:01:50
Yeah, I mean, we talk a lot. And obviously anyone that subscribes to the newsletter, you know, sees the update on the ticker and all these different publicly traded companies and what they’re doing in the space. If, honestly, I think it just shows that hardware is a really strong play, right? There’s just a massive market for it. There’s constant shortages, no matter how big your company is. There’s people that buy like 10 mice at a time because they were out you know, there’s like, there’s so many consumers for so many different reasons. You know, I love I love the HP, you know, article we just covered and, and I just think hardware is a very strong play, and I need to spend more of my free time looking at where that’s going and where I can get involved.

Paul Dawalibi 1:02:35
Lindsay, the CEO of NVIDIA, Jensen Huang, at the his Computex keynote last night or two nights ago, basically said that he felt shortage of gaming cards were gonna last right through till 2022. Like, is there any slowdown you think, like, at what point does everyone like? Does the demand for gaming hardware you think subside? is this?

Lindsay Poss 1:03:02
I don’t think it does.

Paul Dawalibi 1:03:04
Like do you think?

Jimmy Baratta 1:03:08
Yeah, the second, I mean, the secondary market, right, you’re gonna have cards that aren’t the latest in class, but that are maybe a year old or something that people are still paying a premium for. So I think there’s also going to be a large reseller market.

Paul Dawalibi 1:03:22
Yeah, sorry, go ahead.

Lindsay Poss 1:03:24
Well, especially since, I mean, these cards, I obviously gave me is still the number one thing but they’re not even just used for that, like, we use our gaming PC for a whole lot of stuff that I didn’t know, before I had one wasn’t possible on a laptop. So I don’t think

Paul Dawalibi 1:03:44
purchase of a gaming PC, right, like this is this is me to justify

Lindsay Poss 1:03:48
it, whatever.

Jimmy Baratta 1:03:49
I use it for a lot of things as far as the IRS is concerned.

Lindsay Poss 1:03:55
Didn’t think of Yeah, no, I don’t think the demands going anywhere. I mean, we’re only people are only getting more comfortable and more familiar with technology and getting higher and higher needs for it in all aspects of life. I think the pandemic highlighted that even more, I don’t

Paul Dawalibi 1:04:13
have the article here. But I had read a great article about how current shortages like in GPUs, for example, a big part of the problem is how the entire world went to just in time manufacturing, right and, and graphics cards are no different where you keep as little inventory on hand as possible of all your base components. Right? And you have just enough to put together the cards need to make that day basically, and new components come in every day or whatever it is, right like this idea of just in time, minimal inventory. And, and and how the article talked a lot about how that’s basically screwed a lot of businesses in the gaming space because as soon as you have shortages of even just one very minor component now have major problems. And for a company like NVIDIA, who is selling literally every graphics card they can make. Do you think we will see any changes over the next year or two, to account for both the growth in the gaming market and sort of the shock to the system? That has happened right now?

Lindsay Poss 1:05:20
This is this is a loaded question only because the entire supply chain for shipping and moving goods is struggling right now. I mean, there’s a shortage of shipping containers even to get things in and out and across, across ceilings like we were in an unprecedented event. And the like all the world’s shipping just got completely dumbfounded and things that were previously norms were shown to be had basically zero resiliency in the face of any type of trauma. I would not be surprised if there were major changes in a lot of areas, and especially when it comes to hardware and things like chipmakers like now we have a car shortage. Now we have a phone shortage like we

Paul Dawalibi 1:06:05
put in consoles.

Lindsay Poss 1:06:07
Yeah. I mean, we have a shortage of every single piece of technology that we use in our day to day lives, like even breadmakers were sold out on Amazon for a long time, like anything like anything semi technologically related has been impacted by what’s happening at ship globally with international shipping. So do I think that there will be changes, I really hope so. Because if this continues to happen, it’s going to really suck. And I believe that we’ve gotten used to a certain level of service and accessibility of products as a world that isn’t going to be lessened in times of trauma to the shipping market. So it’s certainly hope that there’s some adaptations and some changes that lead to more consistent production or more consistent sourcing of materials or anything within the supply chain that can handle this, these type of events.

Paul Dawalibi 1:07:01
Jimmy, are you surprised that they’re saying NVIDIA’s saying 2022 before anything comes back to normal? You know, this is a little bit of marketing, right? Like, no, like, we’re we can’t ever, like there’s so much demand, we’ll never have

Lindsay Poss 1:07:16
the amount of pissed off people that can’t get their hands on graphics card is a marketing move. It’d be cool. Yeah, it would just be sure to crawl

Jimmy Baratta 1:07:25
on, I’m definitely upset by that announcement. I’m one of those people that want to upgrade my graphics card. But like Lindsay said, we’re in this unprecedented moment. And I don’t think that’s the kind of time period where massive companies are going to significantly change what they’re doing by, you know, by increasing the volume of their manufacturing and distribution, right, especially when distribution is limited by events beyond their control through through whoever they subcontract through. So I what I will say is what I’ve noticed with COVID, like webcams, you know, my dad’s my dad’s an attorney, he has about 40 attorneys in his office, they probably ran the same three webcams to each person’s office, whoever needed it that day, until they could get them because these were sold out. And we were paying twice as much as they were worth to make sure they had enough, you know, for for virtual hearings and things. And I and what I know is Gen Z and Gen Alpha are increasingly relying on computers to get their content, right. They’re not turning on the television, they’re watching on laptops, on tablets on computers, and they want to watch in better and better quality. Right. So the need is what I’m trying to say is definitely there obviously without I mean, obviously, we already knew that. But it’s not going anywhere, if anything is only growing. So I would hope that the video would change its strategy to meet that need, because again, it’s only increasing. But I don’t know if right now is the time for them to do that. Just because they’re so uncertain with what the last 12 months look like versus the next 12 months, that they probably would rather not take a big swing like that, when they’re already killing it. When their stocks doing amazing when their products can’t stay on the shelves. Why would we, you know, why would we flood the market and devalue, you know, ourselves here, let’s ride this out for a little bit longer and sell a little bit more, and then generate more hype, right. And then when they understand where the market is, when everything stabilizes when they have shipping under control, then maybe they increase the volume a little bit more and, and, and cash out pretty well.

Paul Dawalibi 1:07:37
To me and videos just like I just want to close on this like to me and it’s such a bellwether, in terms of health of the gaming industry and growth of the gaming industry and potential of the gaming industry in the sense that like if you had asked me 10 years ago, do I think at some point NVIDIA will sell a $1500 graphics card and not be able to keep them in stock like I would have told you. Like 10 years ago Paul would have told you you’re nuts, right? Like no one’s gonna spend $1500 on a graphics card and be buying them up to the point where the company cannot make enough of them. And and I think it just it speaks to the long term potential and NVIDIA is one of those companies. I’ve said it so many times that like, you want to know how close we are to the metaverse like real metaverse, like track GPU shipments, right when we have GPU shipments, you know, one GPU for every, you know, person on earth. You’re talking about real metaverse potential here, this is what’s going to power a lot of that. And so I think it’s just such a bellwether. And it’s interesting to see the gaming even though they talk a lot about AI and crypto and other things in their keynotes and things like that, that gaming is still the biggest driver for them in terms of revenue and growth. So really exciting and interesting stuff from them.