The growing value of video game streaming in the 5G world

Telecoms.com periodically invites expert third parties to share their views on the industry’s most pressing issues. In this pieceGreg Beitchman, Chief Revenue Officer at Antstream Arcade, urges the telecoms industry not to overlook the commercial potential of gaming.

While the focus of 5G has been primarily on enterprise and business applications, it’s struggled to justify cost and relevance to the average consumer. The awareness is certainly there but, apart from promising faster speeds and offering a general step up in performance, finding the most profitable and enticing applications for public 5G remains a key challenge for businesses.

While better video streaming might be a deciding factor for some consumers, 5G’s potential to enhance the consumer experience of video games through streaming could be truly revolutionary. Not to be confused with live streaming, video game streaming involves placing the expensive hardware needed to play modern games in a data centre, which receives player input and transmits video output to the player’s computer or mobile device as required – rather than running the game on the device itself.

This isn’t a new concept, OnLive launched a games streaming service way back in 2010, long before the technology was even there to support it. But now there is a whole constellation of games streaming services, including Google’s Stadia, Playstation Now, Xbox Game Pass, Nvidia Geforce Now, Antstream Arcade – the list is long and only growing longer. To put it in context, it is estimated that cloud gaming will generate revenues of $585 million by the end of 2020, and will be worth $4.8 billion by 2023.

Each of these services need extra bandwidth, ultra-low latency and ultra-fast throughput speeds, which makes 5G ideal for delivering cloud-based games. But the advantages of streaming services working with telco operators goes beyond the technical benefits, it is also about the potential value add and user acquisition / preference. Resistance to video game streaming as a service from the “core” console owning gaming audience is high. After all, if you already have a powerful enough device to play the games of your choice, the benefits of paying for an additional streaming service is limited.

This will inevitably change with time, eventually the idea of gaming exclusively on a local device will seem as outdated as only buying games on disks rather than downloading them. There’s also the potential for entirely new genres of games or gameplay to be developed around what streaming technology can deliver. Think about how Netflix changed the way video series are produced and consumed through binge watching, related series and even interactive series like Bandersnatch.

But for now, game streaming services are simply seeking to grow audiences and guarantee the best possible experience. And with 5G telecom operators searching for a reason for customers to opt for 5G contracts and devices, the benefits to both parties are clear. We’ve already seen examples of this in action, with Google Stadia’s BT partnership and StarHub’s partnership with Antstream Arcade. With over 2billion people playing video games worldwide, the addressable market is huge.

Therein lies another advantage to cloud-based game streaming, it has the potential to bridge the game between the mobile gaming and mainstream gaming markets. By removing the need to own a PC, Playstation, Xbox or Switch to play titles like FIFA or Call of Duty, the cost barrier to entry for mainstream gaming all but evaporates. Imagine the cultural impact of an already successful game like Animal Crossing if it could be easily played on every connected TV, tablet or phone for the cost of a Netflix subscription – the potential for the facilitators of that would be enormous.

At this point it isn’t exactly clear who will dominate the value chain. With the gaming industry already balkanised there may not be  scope for any one company to create a single ‘Netflix’ for video games. Google may have tried with its Stadia platform, but the limited library of games and slightly immature tech has stymied its success. Deutsche Telekom has opted for its own cloud gaming service in the form of MagentaGaming but it is partnerships like SK Telecom teaming up with Microsoft/Xbox Pass that appear to be the more natural route forward.

What’s also clear is that telco  providers have become so much more than just bandwidth and device sellers –  they have built trusted relationships with consumers, and services like direct carrier billing linked to Value Added Services offer a clear path in enhancing ARPU and in building stickiness. However this pans out, the advantages of 5G for cloud based gaming make closer partnerships between telecom giants and video game platforms inevitable. Just as it happened with music and video, people accessing video games from the cloud is a natural next step for the medium, a next step that can only be taken fully by the advantages that 5G provides.

With the content space being consolidated , gaming represents the perfect opportunity for Telcos to deeply engage users with an entertainment offering which is continually evolving.

Greg Beitchman is the Chief Revenue Officer at Antstream Arcade. As a former Reuters Journalist and VP of Content Sales and Partnerships at CNN, Greg has a history of helping IP owners manage digital transformation, which he has used to establish and expand Antstream Arcade. A lifelong gamer whose first experience with digital content came through retro games, in his role Greg is responsible for promoting the value of video game streaming in reaching new customers, creating new revenue streams and gathering unique data insights to Antstream’s wide array of partners.