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E3 marks a major change in the gaming industry – Electronic Design

The Electronic Entertainment Expo, known as E3, is the largest business conference for video games in the United States and has been going on for 24 years.

The 2019 Expo, held at the beginning of June, had approximately 66,000 people attend. This was a reduction in attendance from previous years. This was partially the result of key exhibitors such as Activision, Sony, and Electronic Arts not being on the show floor.

E3 has ebbed and flowed over the years as companies carefully consider the impact their marketing dollars have when investing in booths. However, theres’s no doubt that E3 is the biggest and most famous show in the USA and draws a lot of attention from fans and press around the world.

This year there were some big announcements with Microsoft revealing their new Xbox and Keanu Reeves surprising fans with his appearance (see photo at top of article) in the upcoming game Cyberpunk 2077. Nintendo announced a sequel to Zelda Breath of the Wild, Bethesda is going mobile with Elder Scroll Blades, Ubisoft’s new Ghost Recon and new titles from Square Enix such as Marvel Avengers and a remake of Final Fantasy 7.

However, below all of this lurks much more impactful transitions and innovations going on in the video game industry that will have a massive effect on the market. Because it’s hard for most people to get excited about a computer chip or a server, the mainstream press sometimes doesn’t devote much time to covering these innovations.

Game-Changing Computer Graphics

The most tangible and immediate of these underlying trends is the advance in computer graphics technology. AMD, Intel, and Nvidia are at the core of this. While, Apple, Samsung, Arm, and others are key to the massive mobile gaming industry, hardcore gamers for the most part use the computing horsepower generated from AMD, Intel and Nvidia.

AMD piggybacked E3 holding their press and analyst event not far from the Staples Center in downtown Los Angeles, the location of the E3 Expo. There the company revealed a host of new products coming to market—the most important of which is the advances in graphics processing on its new line of CPUs. The CPU (central processing unit) is the processor that traditionally does general computer processing while most gamers use a separate GPU (graphics processing unit) for most of the visuals we see in games. However, some CPUs have GPUs incorporated into the chip itself. Traditionally, the performance of these CPUs has caused a lot of moaning and groaning from gamers for poor performance.

AMD’s new Ryzen CPUs aim to change the narrative and are claimed to be able to run popular e-sports titles such as Fortnite, Rainbow Six Siege, and Overwatch at frame rates (perceived as smoothness) that most gamers would be very happy with. What this does to the market is reduce the price of entry-level gaming PCs and open up ultra-lightweight notebooks and ultra-small form-factor desktops to the gaming market. This could result in hundreds of millions of new people across the globe adopting gaming as a hobby.

Wealthier and more devoted gamers will likely still opt for separate GPUs for their added power. This is also the domain of AMD, but the current market leader is Nvidia. Separate GPUs (also known as graphics cards and add-in boards) are such a big business that Intel (traditionally a CPU supplier) is developing them for release within a few years.

All of this adds up to more gamers and a larger market for the people who make games and the peripherals used while playing them. Still, there’s yet another trend that while covered by mainstream press to a degree is possibly underestimated in impact.

Cloud gaming is a technology that allows a person with a good internet connection to stream the game from a server without having to own a powerful CPU or GPU. In fact, with a service such as Google Stadia, launching in November of this year, no traditional computer or console is needed at all. A display with Chromecast or built-in browser and the Stadia controller and service is all that’s needed.

This is a huge development because the barriers to gaming are brought down even further. People that are reticent to try gaming will suddenly have very easy access. In fact, it might get to the point where TVs come with cloud game controllers or they’re provided for free with an initial service commitment.

Google isn’t the only company in the cloud gaming market or enabling the cloud gaming market. Nvidia was the first to come to market with a high-performance cloud service, AMD is supplying the server graphics power to Google, and other companies like Shadow are also involved.

Cloud gaming is a new technology and will not be for everyone or perform well for everyone. However, the impact it could potentially be measured in the hundreds of millions globally thanks to higher-performance internet and urban population densities that Google and the others are betting will be fertile ground for placing cloud-gaming servers.

With the cost of access to high-quality graphics going down, the resulting form factor of systems wielding this power shrinking, and new services such as cloud gaming on the horizon, the ultimate size of gaming conferences like E3 is perhaps not the best barometer of the market’s destiny in the coming years. 

Ted Pollak is Senior Gaming Analyst at Jon Peddie Research.

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