#3 – Gaming and 5G: Game on!
The gaming industry has seen tremendous growth in the past years. Mobile gaming, which accounts for nearly half of the game revenues, is facing evolving business models as more cloud gaming and Netflix-type of subscription services are starting to appear. The improved capabilities of 5G networks will further enable this type of game consumption as well as deliver a superior experience for newer types of content such as AR games. Mobile operators will therefore be increasingly looking into how to capitalize on the 5G mobile gaming use case and we expect to see many partnerships with gaming companies in 2020 as a way to promote 5G services and drive 5G uptake.
Long gone are the days when gaming and esports were the pastime of the geeks. The gaming industry has taken the crown in entertainment, surpassing music and movies – there are now more than 2.5 billion gamers worldwide, estimated to spend over $150 billion on games in 2019 (NewZoo, 2019 Global Games Market Report). Of this, mobile gaming was the largest segment, accounting for 45% of revenues (close to $70 billion).
The mobile gaming segment (smartphone and tablet) has been dominated by countless free-to-download games that aim to monetize through in-app purchases. The next step in the business model evolution is to see more cloud gaming and Netflix-type of subscription services that allow consumers to easily browse a curated portfolio with premium game content and instantly start streaming the games from the data center to their mobile device. 5G networks, with their greater capacity and performance improvements in terms of speed and latency as well as larger (or unlimited) data packages, will deliver a much better experience and be an important enabler for this type of game content consumption.
Apart from how the above-mentioned traditional gaming content is delivered, newer types of more immersive content such as augmented reality (AR) games that showed their potential and captured audiences over 4G networks (e.g. Pokemon Go), will now get a much- improved experience and boost with the capabilities of 5G networks.
For mobile network operators, the gaming consumer segment and their needs is too big to ignore. We expect to see increased attention from mobile operators on how to capitalize on the 5G mobile gaming use case. These efforts can take many forms, but in particular we foresee that in 2020 operators will strive to form partnerships with gaming companies to package and promote mobile gaming content over 5G as a marketing and differentiation tool for their 5G services.
Early examples are the collaboration between US operator Sprint and Hatch, a cloud gaming service, that comes pre-loaded on Sprint 5G smartphones with a complimentary 3-month subscription. In South Korea, SK Telecom signed a partnership deal with Riot Games Korea that will focus on promoting SK Telecom’s 5G brand, “5GX” – the partnership includes broadcasting rights for the League of Legends Champions Korea (LCK) and the creation of exclusive augmented reality (AR) and virtual reality (VR) content to offer a more realistic and immersive experience when watching esports games.
We expect as 5G rollouts pick up speed in 2020, gaming will be an area of high interest and activity for mobile network operators and one of the important drivers for 5G uptake.