Why ‘Twitch matters’ for CSP revenue
Telecoms.com periodically invites expert third parties to share their views on the industry’s most pressing issues. In this piece Matthieu Bourguignon, Senior Vice President and Head of Europe, Nokia Network Infrastructure, examines the growing importance of gaming to the telecoms business.
August 5, 2024
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The history of video games can be traced back to the 1960s, however, it was at the turn of the century - when the internet became mainstream - that games began incorporating on-line components. Since then mobile gaming has taken over, making games easier to distribute via digital channels and leading to the emergence of new business models such as free-to-play and subscription packages that utilise advertising as a core revenue generator.
With The Economist estimating that as many as 3.2 billion people play video games globally (about 4 in 10 people) and with 100m additional people forecast to take up gaming every year, it’s high time for Customer Service Providers (CSPs) to start caring about gaming.
Not only because of the impact games can have on the network - for example, ‘viral’ games result in huge spikes in network traffic as millions of people play simultaneously - but also because the way consumers in particular use their services is changing, making it important for providers to adapt.
In the same way that cinema helped model society in the previous century, gaming is helping to model this one. Gaming is becoming a social media mass medium, and it’s culturally transformative. What’s important though is that its success, or failure, is dependent on the telecommunications network that underpins it.
Network evolution
Serious gaming, including very high-profile games such as Fortnite, have had a significant impact on telecoms networks. As far back as 2019 Fortnite was recorded to have increased peak demand by 40% for one UK operator. This is why ‘Twitch’ - which has two meanings, in this context - matters.
Owned by Amazon, Twitch is an American video game live-streaming service that allows individuals to stream, whilst Amazon also broadcasts esports competitions, music and video content. The Twitch platform is proving that gaming is a social phenomenon; it’s a place where people can gather to form relationships and communities, and where viewers are as much a part of the game as the people playing it.
Twitch also refers to a type of gameplay that tests a player’s response times, typically in fighting or sports games. These games rely on very quick reaction times. The ‘Twitch’ refers to the sudden movement a player makes as they react to something happening on the screen; they see and react.
The gaming experience now relies on the capability of the network connecting the gamer to the server that is hosting the game, which may be a long distance away, or even on another continent. It doesn’t matter how quickly the player reacts - if their opponent has a faster connection, they are immediately disadvantaged. Network capacity, reliability and throughput are critical to the gamer’s experience.
For them, the network is mission critical.
Market opportunity
This makes the gaming community of special significance to CSPs; they are ready and willing to show loyalty to the provider offering better connectivity and an enhanced gamer experience, even at higher costs.
CSPs access to usage data gives them a deep knowledge of their customers. This creates a unique opportunity for them to leverage their brands and existing customer bases to take advantage of their critical network assets and deliver gaming as a complementary adjacent service offering, too.
Not only can they deliver bandwidth and manage performance in a way that will increase engagement and loyalty (some service providers have already realised this potential - for example Verizon, with Riot Games, leveraged its 5G service roll-out to provide an enhanced gaming experience for players and developers), but it can open up service offerings, too.
For example, CSPs may wish to add exclusive gaming services for existing customers that could enable direct carrier billing and mobile wallets as they look to make purchasing more advanced games, or in game features, more convenient for customers - this market alone is expected to grow to $1.96 trillion by 2032.
Another key segment is cloud gaming - where service providers can excel as infrastructure is pushed to the edge of the network to maintain service quality. Partnerships between cloud game developers and service providers are mutually beneficial, as there is a significant opportunity to upsell connectivity, including using slicing and cross technology packages, and the developer gains access to the various devices and consumers on the network.
What’s clear is that the revenue opportunity created for CSPs by gaming is already significant. But the key to shutting out the competition will be in how they choose to evolve their networks to serve this customer segment in years to come. Innovation is essential, and utilising existing customer knowledge to anticipate the ‘next big thing’ in gaming will help them to prepare their networks accordingly.
Matthieu Bourguignon is the Senior Vice President and Head of European Sales, for the Network Infrastructure Division, at Nokia. In this role, Matthieu leads the European team that is delivering the infrastructure that powers the European Digital Economy, with mission-critical IP core and access, Optical and Fixed Access, for both Communications Service Providers and Enterprise customers, including within Public Sector.
Previously, Matthieu led Nokia’s European Enterprise Division, where he delivered annual double-digit growth into multiple market segments, including Transport, Energy, Public Safety & Defense, Manufacturing & Logistics. Prior to joining Nokia, Matthieu was a strategic analyst at Dassault Electronique (Thales) and held senior leadership roles at both Alcatel and Alcatel-Lucent, supporting Communication Service Provider customers in both France and Asia. During Matthieu’s tenure at Alcatel-Lucent, he also held the role of Deputy CEO of Alcatel-Lucent France between 2013 and 2015.
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