Month: July 2021

Consumer gaming in the 5G era: is there a new opportunity for operators?

We knew it was not a matter of if, but when; like with music and video in the past, digital transformation is now disrupting the gaming industry. Shifting consumer behaviour is a major driving force, as is recent progress with enabling technologies such as cloud, 5G and immersive reality. Here we look at the transformation of the gaming industry across different areas, and analyse what it means for mobile players.

 Gamer behaviour is changing

Gaming is a popular pastime for people of all ages. GSMA Intelligence Consumers in Focus research shows that 60% of the adult population across the 20 major countries we analysed plays digital games on consoles, PCs or mobile devices at least once a week. That is a significant user base. Our research also shows that gamer behaviour is changing. First, there is a shift of gaming time from consoles to mobile devices, especially smartphones. This brings greater reach and higher consumer engagement, owing to the ubiquitous adoption of smartphones and the plethora of games available on mobile app stores.

Second, like with music and video, a subscription model is now emerging for gaming, as consumers show interest in it. Today, gamers have a broad and diverse range of options to choose: these include subscriptions for consoles (e.g. PlayStation Now, Nintendo Switch Online, Xbox Game Pass), cloud gaming subscriptions (e.g. Google Stadia, Tencent Start, GeForce Now), subscriptions designed for mobile (e.g. Apple Arcade, Google Play Pass) and subscriptions provided by game publishers (e.g. Uplay+, Origin Access).

What does this mean for the gaming industry?

It means disruption and innovation. The advent of mobile as a gaming platform and the rise of cloud-based gaming have disrupted the position of consoles as the dominant platform, opening up the market to new competitors. Console sales have been hit in recent years, while some OEMs have enhanced the gaming capabilities of their smartphones. Flagship mobile devices (e.g. the Samsung Galaxy S21, Razer Phone 2 or Asus ROG Phone 5) are marketed specifically for gaming, with aftermarket accessories that can turn these devices into dedicated mobile gaming consoles.

It also means a new business opportunity. Let’s do the math; 15% of gamers (in the 20 countries we analysed) already have a gaming subscription; half of gamers are not interested in a gaming subscription (for now); that leaves an incremental market of at least 35% of gamers. If subscription gaming is to work as a mass-market commercial product, gaming companies will need to attract non-paying gamers and turn them into paying gamers.

The prominent cloud gaming services in operation are run by the big companies with established cloud and content delivery network infrastructure footprints (e.g. Microsoft, Google and Tencent), but mobile players, such as Apple and a range of operators, are making progress here too. Also, last week, Netflix confirmed its intention to enter the gaming market (certainly a big development).

Why are operators looking at gaming, and why now?

So far, operators have mostly benefited from gaming indirectly through upselling, as heavy gamers need larger mobile data allowances. However, the shift of gaming to mobile devices, coupled with technology innovation that heavily involves (or is led by) operators (e.g. cloud, edge, 5G) are driving new thinking.

5G is important for (at least) two big reasons. First, streaming requires cloud-based content access, delivery and consumption, which in turn requires high-speed connectivity and low latencies – this is 5G territory. The rollout of 5G networks enables the faster and low-latency connections that smartphone gamers need to have higher-quality, uninterrupted cloud-based gaming sessions.

Second, 5G users are more engaged with gaming than 4G users (twice as much to be precise) and are more interested in having gaming services bundled with their mobile connectivity contracts (40% higher interest). Also, nearly half of people playing games on their smartphones frequently find the enhanced gaming experience enabled by 5G appealing – especially among younger generations (see chart). This is something for operators to consider when designing their 5G and multi-play offerings and tariffs.

Figure: Appeal of enhanced gaming as a new 5G use case

Percentage of respondents*

* Of those who play games on their smartphones frequently (at least once a week) Question: “5G is expected to create new ways to deliver services to consumers. To what extent does gaming appeal to you?”

Source: GSMA Intelligence Consumers in Focus Survey

What are the strategic routes to gaming for operators?

An increasing number of operators are aiming to monetise the transformation of gaming via a more direct role. We have identified four possible routes for operators. Two of them are B2C-focused: selling third-party gaming services or developing own-branded services, often bundled with mobile or quad-play offerings. The other two are B2B-focused: offering premium network capabilities (e.g. edge technology, network slicing and private networks) to gaming/media companies or developing e-sports. These routes are not mutually exclusive – a complete gaming strategy may well involve a combination of these options.

Selling third-party gaming services (bundled with mobile) represents the fastest and most common approach for operators, but it is largely a customer acquisition/retention strategy. Developing own-branded gaming services offers greater monetisation. As with video streaming, operators will find it challenging to have a cloud gaming service that is competitive globally; however, it is within their reach to launch competitive propositions for local markets. A range of operators have already launched local cloud gaming propositions, including Deutsche Telekom, TIM, Vodafone Italy, China Mobile and the three South Korean operators. KT and SK Telecom each aim to reach 1 million gaming subscribers over the next 2–3 years; this would correspond to around 10% of their 5G subscriber bases (assuming that most gaming subscribers will be 5G users).

What is the incremental revenue opportunity for operators?

Our revenue opportunity model considers multiple factors, such as the current adoption of subscription gaming, the probability that core gamers will adopt a subscription in the future, the 5G effect (a function of 5G penetration and 5G gamer behaviour) and pricing dynamics. We sized both the direct (gaming subscription revenue) and indirect contribution (core ARPU uplift) of gaming. The indirect contribution is important, as the average mobile spend of 5G paying-gamers is 20% higher than that of 4G paying-gamers, meaning 5G gaming attracts premium mobile subscribers.

Taking 2020 mobile revenue as the base, gaming subscriptions could generate up to 4% of new revenues for operators in 2025. This ranges from 3% in the UK, Italy and the US to 4% in South Korea. Given that annual mobile revenue is set to grow low single-digits in three of the four markets (and declining in Italy), the gaming opportunity, which comes on top of these figures, can be remarkable. In addition, operators are exploring the gaming opportunity in a period when traditional pay-TV revenue is under pressure and falling in some markets, providing one more reason to try and do well in gaming.

As mobile increasingly shapes the future of gaming, we will continue to track and assess technology developments, gaming adoption, and business opportunities. You can read more on this topic in our latest report Gaming comes into its own: capitalising on shifting consumer behaviours.

By Pablo Iacopino, Head of Research and Commercial Content, GSMA Intelligence

Intelligence Brief: Assessing latest developments in open RAN and public cloud

Last month saw the return of MWC21 Barcelona, the most anticipated event in the telecoms industry calendar. No surprises, then that we saw myriad announcements and developments in the last month from a wide spectrum of topics.

We decided to shed some light on developments in two of the most hotly debated topics in the industry right now, open RAN and public cloud.

Open RAN going global
Do you know?
As of today, 73 operators from 38 markets have either deployed or committed to open RAN deployments. Scanning through the list of operators and their geographic presence, it is clear the approach is now going global, touching developed and developing markets alike (see chart, below, click to enlarge).

[1]

Moves including Axiata Group announcing plans to deploy in multiple countries by end 2021, MTN detailing plans across its footprint, or a partnership between Bharti Airtel and Tata Group to deploy Indian systems, highlight the rapid global spread.

The momentum continues in other parts of the world also with the UK government funding a 5G testing laboratory and Deutsche Telekom switching on its O-RAN town with Massive MIMO radio units for high performance. The foundation of open RAN was laid with the creation of the Telecom Infra Project (TIP) in 2016, but 2021 is clearly the year when we are seeing global momentum.

We saw many interesting developments in the open RAN space in the last month, some of which are highlighted below:

12 July: Middle East operators join forces to implement solutions
9 July: Vodafone teams with Mavenir to develop small cell solution for indoor connectivity
2 July: UK government launched £30 million competition for deployment in the country
29 June: Google Cloud joins O-RAN Alliance
24 June: Mavenir, Qualcomm to develop indoor and outdoor solutions
17 June: Algar Telecom to conduct tests on its 4G network

So what?
All the above points towards growing momentum and deployments going global. Does this mean operators which have not yet advanced their open RAN plans need to jump on the bandwagon now?

The answer depends on the current situation and requirements of each operator. Their decisions will be driven by factors including where they are in the lifecycle of their legacy networks; their capex versus opex split in networks investment; and whether they are looking to upgrade brownfield networks or build a greenfield 5G network.

GSMA Intelligence’s Operator in Focus Network Transformation survey found operators also see ownership/coordination, lack of internal expertise and integration into existing systems as the top challenges for adoption of open RAN. While cost saving is often advocated as one of the benefits, a lack of clarity regarding return on investment acts as a hurdle.

The above challenges do not mean operators must necessarily reject open RAN. Rather, they need to be aware of their requirements and network evolution plans. And in the present, operators still need to get the ball rolling by forging partnerships allowing them to undertake R&D on existing networks, understand use cases with open RAN deployments, and undertake trials to better inform their deployment decisions.

Are the clouds over public cloud clearing?
Do you know?
What did leading public cloud evangelist, Danielle Royston, tout for the sector at MWC21? She said simply “go all in”.

It is natural for an evangelist to make such a statement, but she backed it up by advocating the perceived benefits of using hyperscalers and public cloud, namely massive reductions in the total cost of ownership, scalability and flexibility, and employing the regional and local presence of data centres to make edge computing viable.

There were plenty of public cloud partnerships being announced by operators prior to 2021. Yet, the announcement from US new entrant Dish Network in April and the presence of Cloud City at MWC21 Barcelona highlights the momentum we now see in adoption.

The increasing intersection of telecoms and public cloud is reflected in the below announcements and is also mirrored in the forthcoming MWC21 LA theme of Telco Cloud.

5 July: Dtac with AWS unveiled a proof-of-concept 5G Private Network solution for enterprises
30 June: AT&T to shift 5G core to Microsoft Azure
29 June: Google Cloud and Ericsson collaborate to develop 5G and edge cloud solutions
29 June: Google Cloud joins O-RAN Alliance
28 June: Swisscom partners AWS for cloud services
24 June: Reliance Jio partners with Google Cloud for 5G
21 June: Dish Network announced its plans to run Nokia’s standalone 5G core software on AWS
16 June: Microsoft launches Azure Private MEC

So what?
There is clear momentum behind public cloud in the telecoms industry with progress on multiple, fronts from network related developments to co-developing enterprise-related solutions and hyperscalers working on future-proof solutions.

But the industry is still divided on the killer use case. Where some see latency as the benefit (using data centres for edge computing) of using public cloud, others see the same as a risk of using shared space.

Beyond this, adoption faces headwinds from the speculated risks to privacy and data security. The data sovereignty rules in some markets will also make it difficult for many operators to fully embrace the public cloud.

However, the multitude of enterprise opportunities in the 5G era are only expected to be supported by the new cloud native architecture powered by AI solutions and edge computing, made possible using the cloud. This makes it inevitable for operators to embrace cloud technology: the choice is simply between public or private cloud.

To capitalise on the benefits of public cloud and overcome the highlighted risks and challenges, the industry must work together. A wait and watch approach does not always guarantee success, but working together and co-creating systems certainly does.

The transition to public cloud will be a gradual and phased process made possible with initiatives from across the cloud ecosystem. Hyperscalers are also taking initiatives to make this happen for operators: Google Cloud joining the O-RAN Alliance; Azure launching private MEC; and AWS introducing local data processing on outposts are sign of things to come.

All the above analysis is based on news curated by GSMA Intelligence’s team of analysts and taken from their Industry Updates feed, available here [2].

– Radhika Gupta – head of data acquisition, GSMA Intelligence

The editorial views expressed in this article are solely those of the author and will not necessarily reflect the views of the GSMA, its Members or Associate Members.

[1] https://www.mobileworldlive.com/wp-content/uploads/2021/07/GSMA_Intelligence_openRAN_deployments.jpg
[2] https://data.gsmaintelligence.com/industry-updates

July 2021 in telecoms: MWC21 & more

Curated: GSMA Intelligence takes on Open RAN and Public Cloud developments

Last month saw the return of MWC Barcelona– the most anticipated event in the Telecoms industry calendar. No surprises then, that we saw myriad announcements and developments in the last month from a wide spectrum of topics.

For this edition of CURATED, we decided to shed some light on developments in two of the most hotly debated topics in the industry right now – Open RAN and Public Cloud. As usual, we bring you a combination of known and unknowns from the topic.

Open RAN: Going Global

Do you know?

As of today, 73 operators from 38 markets have either deployed or committed to Open RAN deployments. Scanning through the list of operators and their geographical presence, it is clear that Open RAN is now going global, touching developed and developing markets alike. Be it Axiata announcing plans to deploy Open RAN in multiple countries by end 2021, MTN announcing its Open RAN plans across its footprint, OR the partnership between Airtel and Tata to deploy indigenous Open RAN solutions–highlighting the rapid global spread.

 The momentum continues in other parts of the world also with UK government funding a 5G Open RAN testing lab and Deutsche Telekom switching on its “O-RAN town” with massive MIMO radio units for high performance. The foundation of Open RAN was laid with the creation of TIP in 2016, but 2021 is clearly the year when we are seeing Open RAN gain global momentum. We saw many interesting developments in Open RAN space in the last month, some of which are highlighted below:

So what?

All the above points towards two things for Open RAN – growing momentum, and deployments going global. Does this mean that Telcos who have not yet advanced their Open RAN plans need to jump on the bandwagon now?

There is no clear “Yes” or “No” answer. This will depend on the current situation and requirements of each individual operator. Their decisions will be driven by factors such as   – where they are in the lifecycle of their legacy networks, what is their CAPEX vs OPEX split in networks investment, are they looking to upgrade brownfield networks or building a greenfield 5G network. According to the GSMA Intelligence Operator in Focus Network Transformation survey, Telcos also see ownership/co-ordination, lack of internal expertise and integration into existing systems as the top challenges for adoption of Open RAN. While cost saving is often advocated as one of the benefits of Open RAN, a lack of clarity on ROI also acts as a hurdle.

The above challenges do not mean Telcos must necessarily reject Open RAN. Rather, telcos need to be aware of their requirements and network evolution plans. And in the present, Telcos still need to get the ball rolling by forging partnerships that allows them to undertake R&D on existing networks, understand use cases with Open RAN deployments, and undertake trials to better inform their deployment decisions.

Are the clouds over public cloud clearing in telecoms?

Do you know?

What did leading public cloud evangelist, Danielle Royston, tout for public cloud at MWC? She said simply – ‘GO ALL IN’! It is natural for an evangelist to make such a statement but she backed it up by advocating the perceived benefits of utilising hyperscalers and public cloud, IE TCO savings (in millions and billions), scalability and flexibility, leveraging hyperscalers’ data centres both to save costs and use  their regional and local presence to make edge computing viable.

There were plenty of public cloud partnerships being announced by telcos prior to 2021. Yet the announcement from US telco Dish in April and the presence of Cloud City at MWC Barcelona highlights the momentum we now see in the adoption of public cloud. The increasing intersection of telecoms and public cloud is reflected in the below announcements and is also mirrored in the forthcoming MWC LA theme of Telco Cloud.

So what?

There is clear momentum behind public cloud in the telecoms industry with progress on multiple fronts from network related developments to co-developing enterprise related solutions and also hyperscalers working on future-proof solutions. But the industry is still divided on the killer use case. Where some in industry see latency as the benefit (leveraging data centres for edge computing) of using public cloud, others see the same as a risk arising from using shared space on a public cloud. Beyond this, the adoption of public cloud is also facing headwinds from the speculated risks to privacy and data security. The data sovereignty rules in some market will also make it difficult for many operators to fully embrace the public cloud.

However, the multitude of enterprise opportunities in the 5G era are only expected to be supported by the new cloud native architecture of 5G, powered by AI solutions and edge computing made possible using the cloud. This makes it inevitable for telcos to embrace cloud technology; the choice is simply between public or private cloud. To capitalise on the benefits of public cloud and overcome the highlighted risks and challenges, the industry must work together. A WAIT and WATCH approach does not always guarantee success but working together and co-creating solutions certainly does.

The transition to public cloud will be a gradual and phased process and will be made possible with initiatives from across the cloud ecosystem. Hyperscalers are also taking initiatives to make this happen for telcos – Google Cloud joining O-RAN alliance, Azure launching private MEC, and AWS introducing local data processing on outposts are sign of things to come.

Finally, do you know that?

All of the above analysis is based on news curated by our team of analysts, and taken from our Industry Updates feed. Visit our feed today for more of the news shaping the mobile industry of tomorrow. It comes without interference.

By Radhika Gupta, Head of Data Acquisition, GSMA Intelligence