​Gaming is big business, and we don’t mean sports betting or lotteries, but on-line gaming.  As both a panacea and a nightmare for parents, assumedly idle time is filled with hand-held devices, consoles, PCs and smartphones being twisted, turned, pushed, swiped and generally attacked while battles rage, respawning occurs, civilizations are built and destroyed, and super teams are created that could never exist in real life.  Statistics on the gaming industry vary considerably with the high end at ~2.9b players in the global market generating ~$176b in revenue this year, with the Asia/Pacific region having the largest share at over 7 times the number of gamers in the US, but China’s most recent set of rules could put a bit of a dent in those numbers.
The National Press & Publication Administration, the agency that regulates the distribution of all publications in China under the auspices of the Propaganda Department of the Chinese Communist Party, has issued a notice entitled “Notice on Further Strict Management and Practically Preventing Minors from Indulging in Online Games”.  While we have not seen the actual notice, the agency has summarized the content as follows:

• All on-line game companies can only provide minors with 1 hour of service from 8PM to 9PM on Friday Saturday, Sunday, and holidays.
• No on-line services to minors can be provided at any other time and real-name registration for user accounts is required.
• No service is allowed to any unregistered user at any time
• The implementation of such measures will require strengthening supervision and inspection in order to prevent minors from indulging in online games and to deal with online game companies that have not strictly implemented these rules in accordance with laws and regulations.

The note is summarized with the statement that “…it is necessary to actively guide the co-management and co-governance of families, schools, and other social sectors, perform the guardianship responsibilities of minors in accordance with the law, a create a good environment for the healthy growth of minors.” 
The age of consent in China is 14 but most game companies have already implemented their own restrictions that vary from 12 years old to 8 years old and lesser limitations on those between 12 and 18 years old, but there are already adult gaming accounts that are available for rental, meaning it can be ‘rented’ by anyone who has the account password, which gets changed for each ‘renter’, with the account holder and the ‘manager’ sharing the rental fee of 2 yuan ($0.31) per hour.   In some cases you don’t even need a password, only a QR code, which is supplied by the manager, and applications that give access to available rental accounts are available in a number of on-line stores.  ~18% of the Chinese population is 14 or younger.
That said, a report from Tencent (700.HK) indicated that in July of this year an average of 13.6m minor accounts were forced off-line by their system as they triggered the company’s 1.5 hour play limit and 10,000 accounts triggered facial recognition verification during the game payment process, with 92.4% of those for ‘failure to verify’ rules.  There are still companies that allow authentication for those that do not have their ID numbers, but we expect it will be a relatively short time before those re able to remain outside of the new restrictions..  While the onus for maintaining the welfare of gaming minors falls primarily on game companies, who would likely feel the wrath of the government when violations are discovered, the rules do acknowledge that the responsibility also falls to the game platform, parents, and schools, although little is specified as to how such rules be implemented outside of the game companies, which likely means additional rules going forward.

​Toshiba (6502.JP) has been around since 1875 and at one time was among the top TV and PC brands, but the company has gone through some hard times, with an accounting scandal in 2015 where the company was found to have inflated profits by $1.2b over a seven year period, and a 2017 debacle over $6.3b in losses at its wholly-owned Westinghouse nuclear plant construction business.  The company still produces a number of CE products, medical products, and semiconductors, but has lost much of the cache it once had in the CE space. 
The company did receive a $20b bid from Britain’s CVC Capital (pvt), but rejected the offer, with Toshiba’s president & CEO stepping down after accusations that the rejection was made to protect his position (he also previous held a position at CVC).  But it seems that things are not quite back to normal at Toshiba, as sources in Japan say that the company is discussing options with a number of private equity firms on ‘suggestions’ about how the company might embark on a new strategy.  It is doubtful that Toshiba is soliciting offers for the company or specific assets, but more some help in formulating a plan for its business lines, as a recent story that the company was secretly cooperating with the Japanese government to put pressure on foreign institutions concerning funding for would-be acquirers began a strategic review of the company after the recent management shakeup.  The company expects to release its new business plan in October
 

​New product rollouts for CE companies have changed over the last year or so as the big in-person events that had been used to highlight the nuances of new CE devices fell prey to COVID-19 concerns.  But such matters do not deter marketing folk and virtual events introducing everything from new smartphones to updated operating systems became the norm.  In the early days of the pandemic such virtual presentations were rather primitive (some still are) and were typically a person on a big stage with a large video screen behind them.  The patter was the same and while the videos were usually well put together, they lacked the more ‘fireside’ feel that makes investors feel like they are just sitting with management.
Skipping ahead to today, things have become far more sophisticated as we have become used to seeing everyone in their basement or living room and a bit more casually dressed.  Nvidia (NVDA) seems to have taken the idea of a more ‘folksy’ approach to product introductions and at the recent Nvidia GTC conference the keynote speaker and CEO of Nvidia stood in a kitchen while he showed off some of Nvidia’s recent accomplishments.

​As it turns out, the presentation, which showed some very detailed and realistic images of Nvidia equipment, was created on Nvidia’s new Omniverse platform that allows 3D artists to work together virtually on almost any existing modeling application, with the Nvidia software acting as a collaboration and imaging tool that can create realistic 3D video that takes models from other applications and brings them together in a consistent virtual world.  Gone are the days of Power Point presentations as such 3D images can be manipulated to show 3D detail while maintaining lighting and other characteristics across the entire presentation.
As it turns out not only was the kitchen a ‘virtual one, but for 14 seconds during the 1 hour and 48 minute presentation, the CEO was not real and a virtual CEO was substituted.  Of course, the discovery that a virtual CEO was used during the presentation caused considerable buzz on social media and Nvidia was pushed to respond with the admission that while the CEO led the conference for almost the entire time, his virtual self subbed in for 14 seconds.   If one delves into the presentation that was made at a recent conference about the Ominiverse software itself, there is a section on how they actually modeled their CEO virtual clone and considerably more on the ‘holodeck’ as they call the virtual kitchen, but most unnerving was that it was ‘virtually’ (sorry) impossible to tell the difference between the real CEO and the virtual one. 
While that is a good indication that the software works as intended and the users (Nvidia staff) are a talented bunch, it begs the question, “Is what I am watching real or not?”  We have noted that some news broadcasts in China are done by virtual anchors that either mimic the actual anchor or are created for that single purpose, and how relatively sophisticated software can manipulate the image of a face to make it fit any audio stream (see below). 
Deep fakes and the like are usually created to prove a point or for nefarious reasons, but just slipping in a few virtual seconds, maybe to see if anyone catches it, or to fill in a bit of missing copy, is where things seem to be going and as the software and processing availability become even more sophisticated, it seems to open the door for IR departments to be creating a different type of communication with investors.  If we can speak with Albert Einstein and get responses to our questions that look real, a generation or two from now will see a social media ‘friends list’ with lots of ‘virtual friends’ including film stars, musicians, politicians, and historic figures with which you have had many intimate conversations with, without leaving ‘the comfort of your couch’, which seems to be the goal of the current generation.  Don’t get us wrong, we love this stuff, but expect the virtualization of media to present a number of very complicated social issues, that will keep the next generation up at night, or will it just become the norm?
Albert Speaks:
https://www.youtube.com/watch?v=RiWB2o-9qMs