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Graphic chip behemoth, NVIDIA Corp. (NVDA - Free Report) recently stepped into the virtual reality (VR) space with the launch of its game, VR Funhouse. NVIDIA had announced the demo a few months ago and worked on the feedback received from developers and consumers to recreate a realistic virtual world.

This new graphic technology announcement by the company is an important one for consumers.

All About VR Funhouse

VR Funhouse is a free, virtual reality experience that provides enhanced graphics capabilities that gamers should love. It offers 10 different mini-games, which let the players face challenges such as tossing basketballs, popping balloons, and shooting at targets fired from a cartoonish cannon etc. The game runs on HTC Vive, which renders the 3D effect to enhance the viewing experience and minimize motion blur or flicker, thus making it more realistic.

The new technology is compatible with the company’s newly launched GeForce GTX 1060 graphics processing units (GPU) based on its Maxwell chip architecture. NVIDIA’s new GPUs offer GTX 980-level performance and twice the energy efficiency in VR that address several lighting and graphics challenges. Also, these GPUs are touted to be more energy efficient than the earlier versions.

Release Date and Price Point

Sadly, neither the release date nor the exact cost of the NVIDIA VR Funhouse was announced yesterday at the press conference. It was only revealed that the final consumer version of the VR carnival game will be available for free later this month from Valve's Steam digital distribution service.

New Growth Driver

NVIDIA believes its Games business to be its strongest growth driver, encouraged by robust console sales, growth in GPUs gaming platform, high-performance computing, datacenter and Tegra automotive platforms. Revenues from the GPU business in first-quarter fiscal 2017 increased 15% year over year to $1.08 billion, driven by strength in GeForce GPUs and Gaming revenues.

NVIDIA has great expectations from the virtual reality field, which allows it to leverage several of its capabilities like gaming, automotive, data center and professional visualization capabilities and entertainment assets.

The virtual reality market is still at a nascent stage but is projected to be the next big thing. NVIDIA has the potential to tap this emerging market perhaps better than any other player at this stage.

To Sum Up

Virtual reality games allow users to enjoy a 3D experience and let them interact with characters in the game. We believe that NVIDIA’s initiative toward promoting the game is a step in the right direction, given its strong foothold in the virtual reality industry.

Furthermore, we believe that NVIDIA’s innovative product pipeline and strength in gaming and high-end notebook GPUs keep it well positioned. We also believe that the higher adoption of NVIDIA’s Tegra processors could act as a catalyst, going forward.

Nonetheless, competition from the likes of Intel (INTC - Free Report) and QUALCOMM Inc. (QCOM - Free Report) remains a near-term headwind.

NVIDIA has a Zacks Rank #1 (Strong Buy).

Investors may also consider Stratasys Ltd. (SSYS - Free Report) from the tech space, which sports the same Zacks Rank as NVIDIA.

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