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Open NVIDIA Control Panel - go to 3D Settings - Manage 3D Settings - Program Settings tab
This is where you set what GPU applications can use (either Intel iGPU or nVidia card).
One at a time add these to the list (Add button - Browse button) and set them to Integrated Graphics:
C:\Program Files (x86)\Steam\GameOverlayUI.exe
C:\Program Files (x86)\Steam\Steam.exe
C:\Program Files (x86)\Steam\steamerrorreporter.exe
C:\Program Files (x86)\Steam\steamerrorreporter64.exe
C:\Program Files (x86)\Steam\streaming_client.exe
C:\Program Files (x86)\Steam\uninstall.exe
Now no more random flickering of the Steam Big Picture blue background while in games. I bet not all of those need to be set to be forced to integrated graphics, like the error reporter and uninstaller, I just got tired of troubleshooting this and did it to every exe in the root folder of Steam, and now it's fixed.
The issue reminded me of how in games when there's two different objects at the exact same coordinates in world they will flicker back and forth because the game engine doesn't know which one should be visible. So I figured both Steam and the game were having a similar issue and forced Steam to never run on the nVidia GPU. Surprisingly it doesn't seem to cause any issues with Steam, and still fixes the game.
My orkaround:
Firstly!
If you changed any settings on NVIDIA Control Panel (3D Settings/Manage 3D Settings/Program Settings tab) as written above, then you should revert it back to default!
Pointing Steam executables to Integrated Graphics will significantly degrade performance on most games!
next:
- If you want to stream game over Nvidia GameStream (I assume that every Shield owner want this)
At host Steam app to turn off Nvidia hardware encoding.
To do that go to Steam > Settings > In-home Streaming > Advanced host options and unthick "Enable hardware encoding on NVIDIA GPU"
- If you play only via Steam link
You should remove useless NGE app ;) and enable nvidia gpu hardware encoding at Steam app.
The flickering we see is your screen switching between the game and big picture. The kicker is, you need to turn off any controller settings in steam. If you don't, steam will automatically launch a version of big picture to handle your controller preferences. This isn't perfect, but it at least works.
If anyone solves the issue permanently without compromising your steam controller layouts, please let us know.
P.S: Don't forget to change the battery saving options so that the laptop "Does nothing" when you close the lid.