Mobile operators can tap into mobile gaming opportunity

09 June 2021 Consultancy.uk 4 min. read
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The $75 billion global mobile games market presents a huge opportunity to telecommunications firms looking to diversify their revenues. According to a study from Analysys Mason, tapping into the sector could allow telecom operators to unlock B2C and B2B revenue opportunities.

The mobile gaming industry has become huge business in recent years. While most people’s minds automatically move to console or PC titles when thinking of digital gaming, mobile gaming is actually the largest subsection of the global industry. While roughly two-thirds of all adults worldwide play digital games, 73% of those play mobile games.

As such, mobile gaming generated revenue of $75 billion in 2020, or 51% of worldwide revenue for digital gaming. With this in mind, telecommunications operators are subsequently keen to find ways to tap into the industry’s growth potential. In order to see how they might best do that, Analysys Mason examined the key features of the booming market.

Mobile gaming industry revenue and users by region, 2020

According to the researchers, the market’s rapid growth means it is important to consider what role core companies play in the value chain. Operators can take a number of key roles in the mobile gaming industry in order to capture growth, but 5G is an intrinsic part of this opportunity.

Martin Scott, a Principal Analyst at Analysys Mason, explained, “5G will drive spending on mobile gaming from $75 billion in 2020 to $138 billion in 2025, when 30% of the smartphones worldwide will be 5G-enabled. 5G will strengthen the growth of mobile gaming services, giving gamers access to higher-value content.”

At the same time, 5G will also enable the next generation of cloud-based gaming services to disrupt the market, because they will be available to new segments of consumers and will facilitate new gaming experiences, such as mixed reality. Due to the reliance of these games on 5G, Ananlysys Mason estimates that all in all, 5G will create up to $12.5 billion of retail revenue in 2025 that operators can target.

These opportunities will come from two large areas. Mobile cloud gaming revenue will grow to $6.4 billion in 2025, while mobile XR gaming revenue will grow to $6.1 billion in 2025. However, to realise this value, operators will need to change their strategy regarding the mobile gaming industry. Operators can play a variety of roles in the mobile cloud value chain, unlocking B2C and B2B revenue opportunities in the process.

Analysis Mason noted four ways in particular operators could do this. These included being a sales channel partner, with Scott noting they could offer “gaming as a value-added service, or reselling third-party or own-branded services.” In this way, operators’ direct relationship with consumers. In the next few years, they can use those services to inform consumers about 5G benefits, while encouraging them to migrate from 4G.

At the same time, the researchers added, networks could act as service aggregators. In the longer-term, operators could offer services via their own consumer platform and infrastructure via a service aggregator play. Operators have a long experience of aggregating and distributing content, particularly video, and of selling services through a subscription model via partnerships.

“Operators should use the growth of 5G-enabled gaming to target the B2B opportunity and to build a mobile edge computing (MEC) proposition,” added Scott, “which they can do in partnership with other operators and/or public cloud providers. As next-generation gaming ecosystems mature, operators should use their MEC, end-to-end network management capabilities to monetise the gaming service providers’ demand for QoS assurance, strengthening the go-to-market partner role.”

Finally, operators could use their position to become ecosystem development partners, by partnering with gaming service providers to accelerate the development of the next-generation gaming ecosystem. This could include new devices, XR content and supporting infrastructure, along with the offering of a go-to-market partner to further show consumers the value of 5G and the gaming experience that it can offer.