In three decades of video gaming there have been some very odd on-screen instructions. The Grand Theft Auto series introduced a controversial healing mechanic, and in PS3’s 2010 title Heavy Rain players were encouraged to “press x to Jason [sic]”, however being instructed to pedal in order to start your unicorn must now be a close contender. It’s also fair to say that very few eSports or sit-down video games will draw much more than nervous perspiration, or perhaps the dreaded Nintendo Thumb some of us used to suffer when attempting to finish seemingly impossible titles like Battletoads (which if played with two players was actually impossible). The Nintendo Wii was the first mass-market gaming platform to show the potential for video games to help users truly exercise, and the motion controllers and uses beyond sedentary gaming were a major selling-point over seemingly superior competing products. The majority of users eventually grew to see the Wii Fit as a novelty workout video with interaction, and slowly consoles were retired in garages, ignored and eventually abandoned like so many gym memberships. Few of those Wii Fit owners have looked back since.
As the VR industry has grown over the last two years a new form of exercise has emerged – Vsports. In this instance, the user is immersed in a 360 degree 3D world, transforming a session on an exercise machine into a totally different experience. Often complaints of reluctant joggers is that running through the streets of Balham is hardly exciting, and thudding on a treadmill whilst watching Simon Cowell’s latest autotuned starlet in the gym is drastically worse. What about running along the banks of the River Tiber whilst chasing rogue legionnaires, or indeed, flying a pedal-powered unicorn? The latter has been made possible by VirZOOM, a company so sure of its product that they are targeting their marketing directly at lapsed gym bunnies. My own aversion to jogging is the lack of competition and the abstract nature of lonely cardio exercise, however a gameplay element and opponents, both virtual and real, will push me the extra mile. Interestingly, in a 2016 CONTEXT survey of EU consumers, sport was the gaming category which excited them the most for VR, with 1 in 5 respondents expressing an interest; this could now mean sport in a very physically-active sense.
For those of us in the ICT industry who have been lucky enough to try VSports at events such as CES, general consensus is that this could be a big category for VR, both at home and in larger installations. As an analyst, I am frequently asked where the opportunities for VR lie for the channel, and VSports offer both a B2B and consumer market. Health technology is persistently strong in terms of sales, and the industry is accustomed to disruptive technology and wearables. Moreover, gyms have long been a customer of AV installers and resellers: almost all gyms contain dozens of TVs and LFDs. The sanitary aspect of VR headsets has not been missed by start-ups, with companies such as VR Cover popping up to sell washable VR peripherals.
Perhaps the most interesting example of the convergence of games, VR, and VSports is the phenomenon of accidental exercise. My own serendipitous encounter with VSport was whilst playing Knockout League on the Oculus Rift/Touch recently. After over an hour of shadow boxing I removed my headset to discover the sort of sweat I’d expect after a 5km run. I’m not the only industry professional to accidentally work out during a normal gaming session: Job Stauffer, Telltale’s head of creative communications recently announced that he’d lost over 50lb playing a VR game, in this case Sandboxing. For those of you in the channel who have routes to the healthcare verticals and are also lucky enough to be distributors or resellers of one of the high-end VR HMDs, my advice is to start some serious conversations about the new categories of VR Fitness Devices and Accessories.
At CES 2017 back in January, Jen-Hsun Huang, CEO of Nvidia announced that “GPU-powered deep learning is driving the ability for computers to perceive the world… But one day, AI researchers met the GPU and the big bang of AI occurred.” Up until more recently, when most ICT analysts thought of Nvidia, the first thing to come to mind would have been gaming, and for a good reason. The core of Nvidia’s business is still PC Gaming where they continue to dominate the GFX hardware market. Jen-Hsun went on to explain that the “GPU had the benefit of being fuelled by the largest entertainment industry in the world, video games.” Indeed, PC gaming is one of the most processing-intensive activities a PC can be asked to perform, and that industry has gone from strength to strength over the past few years. Jen-Hsun was right to tout the success of PC gaming: CONTEXT’s data shows that sales of high-end VR-ready PCs shot up 1057% in terms of revenue y/y for the top 6 EU economies in Q4 2016, and figures from the Entertainment Retailers Association put gaming as contributing more to the UK economy in 2016 than either music or video sales at £2.96bn.
Several thousand miles away from Sin City, the importance of AI and driverless cars was being carefully noted by strategists and civil servants in Whitehall, culminating in the most recent budget announcement. The British government has promised £270m in funding for disruptive technologies such as driverless cars, AI, and robotics. Given the current hard-Brexit policies being pursued by Teresa May’s administration they are wise to support such green shoots; CONTEXT’s figures for professional GPUs back both this decision and Jen-Hsun’s assertion. Sales of professional GPUs in the UK reversed a previous decline in Q3 2016, with Nvidia’s own Quadro series of GFX cards enjoying +25% y/y growth in revenue. More and more GPUs are being purchased to power deep learning and AI for large datacentres, rather than in their more traditional roles for 3D modelling and computer aided design.
It’s not uncommon for devices to be developed with one purpose in mind then being very successfully appropriated for another. Even Atari’s failed Jaguar gaming console ended up being cannibalised and used in dental equipment. The GPU is also the critical lynchpin of another emerging technology: Virtual Reality. In one profound statement, Jen-Hsun declared that “…all gaming was Virtual Reality,” and in many cases this rings true where a player inhabits a virtual world. It might not seem immediately obvious, but components built for PC gaming now power both AI and VR. As a result Nvidia’s share price has soared in recent months, finishing 2016 +224% up from the previous year, and promising to continue to rise as their partnerships and new ventures bear fruit, with professional visualization growing +11%, datacentre at +144% and automotive up +52% for Q4 2016.
This success eventually caused Nvidia’s shares to drop in February when the Q4 results were released as investors weighed up the risks of long-term returns (as driverless cars are still many years away from being commonplace), versus selling stock at an apex. To some extent, the UK government is taking a gamble on driverless cars becoming the norm, and this might reflect the modest £270 sum compared with much higher investment promised by other governments. Academic commentators have also welcomed this news due to the environmental benefits promised by AI-driven vehicles. The immediate future of AI and its importance to the UK economy is very encouraging, but much like Brexit, the longer-term outlook is beyond the most complex algorithm to accurately portend.
When the IT channel gathers in Monaco for DISTREE in February it is always good to get some winter sunshine, not just from the balmy Cote d’Azur weather, but also the opportunity to meet up with panellists, clients and new tech companies.
This year there was a strong distributor focus, and the keynote, delivered by Chris Petersen , our strategic partner, was a look at what distributors need to do to benefit from the omnichannel revolution. Chris challenged the audience provocatively with a tombstone showing that on 14th February 2017, traditional retail died. What is the significance of this date? It was on this day that Warren Buffett, the legendary investor, sold almost all of his WalMart stocks. The WalMart stock has been languishing for years now, as the company is incapable of catching up with Amazon on ecommerce. Their total of $13bn online sales is equivalent to the growth which Amazon puts on every year.
Chris elaborated on 5 areas where distributors can contribute. Here are two key ones:
- The last mile represents 40% of costs – how can distributors help with logistics support such as drop shipment, and inventory management.
- The long tail is the chosen strategy of ecommerce and particularly online marketplaces, which are big competition for distributors. What can distributors do to help retailers increase the breadth and depth of categories which they hold.
In addition, CONTEXT had a workshop slot, and presented a deep dive on three emerging technology areas – Smart Home, VR and PC Gaming. There is a thirst for understanding all these areas, as evidenced by the full house of those attending the talk. Of all of them, the theme which cropped up throughout the three days was PC Gaming. In the CONTEXT presentation there was a very visual presentation of the need for deep analysis in this area, with a slide showing two Asus models. One was a Republic of Gaming model, evidently a gaming machine.
Adam Simon, Global MD – Retail, CONTEXT
The other was a “business” laptop, but when you dig into the specifications you can see that it is also gaming capable. The channel needs to understand the total market if it is to develop the gaming category, and that is where the CONTEXT categorisation is very useful.
Finally, we were asked to take part in a panel on Brexit. All 4 UK participants had been pro-Remain and are all now pragmatic if concerned about the future. We are delighted to see additional investments recently announced by tech companies in the UK, and look for an interesting competition between the hardware strong France and the software strong UK.