5G cloud gaming offers annual $150bn revenue gain – report

Cloud gaming has become a service du jour in recent months, as operators and hyperscalers eye its potential with increasing interest.

Deutsche Telekom (DT) is one of the latest companies to throw its hat into the ring, launching the MagentaGaming cloud-based video game streaming service — or the "Netflix of video games" as described by Claudia Nemat, DT's board member for technology and innovation.

Game on: Like other European operators, Deutsche Telekom is pinning its hopes and dreams on 5G gaming.  (Source: Deutsche Telekom)
Game on: Like other European operators, Deutsche Telekom is pinning its hopes and dreams on 5G gaming.
(Source: Deutsche Telekom)

Google has already launched Stadia and Nvidia offers GeForce Now, while Microsoft is set to launch Project xCloud tomorrow.

DT is fully aware of the competition it faces, but Nemat said last year that the operator is "still convinced that we're on the right track," partly because of its "powerful" fixed and mobile networks including 5G.

The operator is also making use of a decentralized, edge cloud infrastructure to bring the gaming service closer to the user.

Playing the game with 5G
A new report carried out on behalf of communications software and network solutions provider Ribbon Communications has highlighted the revenue opportunities of cloud gaming for carriers with 5G networks.

Indeed, standalone 5G is set to play a big role in supporting cloud gaming because of the network's lower latency, higher throughput and increased reliability.

According to an online and email survey of over 5,000 "ardent gamers" in Germany, Japan, South Korea, the UK and the US, carried out by Sapio Research in April and May 2020, there is a US$150 billion incremental revenue opportunity per year in cloud gaming for 5G operators.

Patrick Joggerst, chief marketing officer and EVP of business development at Ribbon, said the study shows that cloud gaming, combined with 5G, "is a gainful area for carriers to address."

Essentially, the study shows that keen gamers are willing to pay a premium for the improved performance that 5G can offer.

Indeed, 58% of those surveyed say they already pay a premium to ensure a better gaming performance, while 95% said they would pay more and 58% said they would switch providers if a competitor offered a high-quality gaming service with a new 5G subscription.

"Based on the extrapolation of this survey data and publicly available gaming market forecasts from Newzoo, the opportunity to provide the high-performance connectivity to enable cloud games could be worth more than $150 billion to carriers deploying 5G," Ribbon said.

Newzoo forecasts that the global games market will generate revenues of $159.3 billion in 2020, representing year-on-year growth of 9.3%.

Want to know more about 5G? Check out our dedicated 5G content channel here on Light Reading.

Joggerst also pointed to additional revenue opportunities through the formation of partnerships with gaming content providers.

"Carriers that invest in and build standalone 5G networks will be the first to offer advanced connectivity, and will find themselves well-positioned to form new partnerships with gaming content providers and dominate the 5G cloud gaming sector accordingly," he said.

Operators are certainly alive to the cloud-gaming potential.

Vodafone, for instance, teamed up with Hatch when it launched 5G in the UK and Germany, and partnered with Ubitus to launch GameNow in Italy. Like DT, Telefonica has been exploring the use of edge cloud to support mixed reality gaming.

Any confirmation that gamers will be prepared to pay a little more for such advanced services will no doubt be music to the ears of operators seeking ways to drive revenue from their expensive 5G network investments.

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— Anne Morris, contributing editor, special to Light Reading

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