During NVIDIA's (NASDAQ:NVDA) most recent earnings call, company CEO Jen-Hsun Huang talked about a number of growth drivers for PC gaming and, by extension, demand for its high-performance gaming-focused graphics processors.
One thing that stood out to me is that Huang was quite upbeat about the shift to 4K gaming as a factor that could drive an "uplift" in the company's core gaming graphics processor business. Let's take a look at what Huang had to say and see if we can back his claims up with some hard numbers.
Understanding what drives the need for more performance
NVIDIA, and really any vendor of graphics processors into just about any computing market, benefits when its customers need to upgrade to faster graphics processors. What drives people to upgrade to faster gear is often that their current hardware can't run the kinds of games that they want to run at the quality settings that they'd like very well.
In other words, as games get more demanding, people are more likely to want to upgrade.
Games typically become more graphically intense as game developers make games look more realistic through more detailed character models and environments, more sophisticated lighting and shadowing algorithms, and other hardware-intensive technologies.
Another way that games can become more demanding is when they are run at higher resolutions. The more pixels that the graphics card needs to process, the greater the load on the graphics processor. Additionally, higher resolutions generally require benefit from the graphics card having more on-board memory.
4K gaming is quite stressful, even on modern hardware
Generally speaking, a game is "playable" if a system can render it at 30 frames per second or better. A game is generally considered "smooth" if it's running at 60 frames per second. With that in mind, let's take a look at how the Titan X handles 4K.
According to well-respected hardware review site Tom's Hardware, the fastest single graphics card on the market today -- the NVIDIA Titan X -- averages about 39.4 frames per second in the game Battlefield 4. In Far Cry 4, the Titan X averages, yet again, 39.4 frames per second. In the game Metro Last Light, the Titan X averages just 38.8 frames per second in 4K.
That's hardly what I'd call playable; a smooth 4K gaming experience in modern, graphically intensive titles seems to be out of reach for even a $999 Titan X.
What does this mean for NVIDIA?
Today, 4K gaming is hardly the norm among PC gamers. If we look at the Steam Hardware Survey conducted by Valve Software, 34.62% of Steam users are running monitors with a resolution of 1920-by-1080 and 26.28% are running monitors at a resolution of 1366-by-768. 1440-by-900, 1600-by-900, and 1680-by-1050 are pretty common too, commanding 5.25%, 7.42%, and 5.05% share among Steam users surveyed.
How about higher resolution monitors? Well, about 1.10% of the Steam user base is rocking 2560-by-1440, and a whopping 0.06% is using 3840-by-2160 or what is known as "4K."
I think it will be a long time before 4K monitors are anywhere close to mainstream among gamers, even if such displays are, according to Huang, "becoming quite commoditizes and quite affordable." That said, NVIDIA should benefit as the average resolution of gaming monitors moves up.
In short, I'm not expecting an immediate boost in NVIDIA's revenue from lower prices of very high resolution monitors, but I do agree that this driver should continue to be a factor that helps keep NVIDIA's gaming graphics chip business humming along.
Ashraf Eassa has no position in any stocks mentioned. The Motley Fool recommends Apple and Nvidia. The Motley Fool owns shares of Apple. 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.