Analysts believe one of the next significant growth areas for direct carrier billing is cloud gaming, despite its relatively nascent market and projected to grow only once 5G services become mainstream.
Research company Newzoo noted a global spike in cloud gaming platform sign-ups during 2020 as people spent more time playing computer games during long periods of social and economic lockdowns. The surge in interest has led the company to estimate cloud gaming revenue will grow from US$669m in 2020 to US$1.57bn in 2021. By the end of this year, Newzoo expects there will be 23.7m paying users of cloud gaming services, up from 13.5m in 2020, with average revenue per paying user (ARPPU) hitting US$66.3.
Omdia too sees a bright future for cloud gaming, as mobile network operators (MNOs) can harness to showcase the capabilities of their newly deployed fifth-generation (5G) networks and attract a new generation of younger subscribers to their services. Speaking at the Global Carrier Billing Summit in September, Guillermo Escofet, Principal Analyst at research firm Omdia, highlighted the potential for carriers to increase their revenue via bundled subscriptions to cloud gaming platforms and the ability to charge for these services via direct carrier billing.
Microsoft’s Xbox Game Pass, which includes access to the cloud services and software giant’s beta cloud gaming platform, is the leading candidate. Escofet says that Microsoft is keen to harness carriers’ distribution prowess, and the pass is mostly being bundled as a carrier-billed add-on, though some are also bundling it with the Xbox console.
Amazon’s equivalent – Prime Gaming – is another example that will eventually offer access to Amazon’s cloud gaming platform (Luna) when it emerges from its own beta trial. As of the second quarter of 2021, Omdia counted 18 live carrier bundling partnerships worldwide, encompassing cloud gaming services from eight providers. These included AirConsole, Antstream Arcade, Blacknut, Blade, gameQoo, Google, Microsoft and Nvidia, with the latter having been particularly proactive in carrier partnerships via its GeForce Now Alliance program.
5G could be a cloud gaming catalyst
Cloud gaming combines two areas of growth for operators – 5G and DCB. The faster, more reliable mobile bandwidth and extended coverage delivered by 5G networks enable carriers with an opportunity to provide cloud gaming services with lower latency. Quite simply, 5G allows players to experience console-quality cloud gaming on the go using their smartphones.
Bundling gaming subscriptions with their mobile packages in the same way most currently do with SVOD platforms like Netflix and Disney+ is a massive opportunity for MNOs. It helps them attract and retain a new, younger subset of customers, reduce churn, and offer competitive differentiation. Cloud gaming also represents a shop window for the enhanced capabilities of their 5G network infrastructure, which can help persuade consumers to upgrade from their existing 4G tariffs. Estimates suggest that a single cloud gaming session consumes on average two to three times more bandwidth than a typical Netflix equivalent.[i]
For the moment, however, Omdia estimates that just 2.1% of current 5G tariffs available globally in the first six months of 2021 were bundled with cloud gaming services, with eSports accounting for another 2.5%. Those opportunities should increase when Microsoft delivers on its promise to improve access to Xbox Game Pass via Xbox Cloud Gaming revealed earlier this year. Microsoft intends to embed cloud gaming capabilities into more devices, including connected TVs, dedicated streaming devices and PC applications, all of which should help telcos offer multi-device cloud gaming subscriptions alongside both fixed and wireless broadband packages.
In the last few months, there has been a surge in new telco cloud gaming subscription bundles and partnerships. That includes Verizon offering a free twelve- or six-months subscription to Google Play Pass, for example. However, participants must be subscribed to an eligible Unlimited 5G plan to claim the offer. Rival US telco AT&T also announced a free six-month subscription to Google Stadia Pro for its 5G wireless customers.[ii] And Telecall is partnering with Radian Arc and Blacknut to resell the latter’s cloud gaming service to its subscriber base in Brazil and other countries in Latin America.
Many cloud gamers are young and do not have the money to invest in dedicated gaming consoles or high specification gaming PCs and components. That is particularly true in emerging markets where smartphone ownership is already high and continues to grow (the Asia Pacific region is home to the world’s largest population of cloud gamers).
MNOs must establish working partnerships with cloud gaming providers to deliver services at attractive prices if they are to succeed in these countries. But offering convenient, flexible billing methods for subscriptions and in-game content via direct carrier billing will be vital to acquiring customers particularly in the unbanked and underbanked markets.
[i] The rise of platform agnostic cloud gaming, telecoms.com, 28th June 2021
[ii] Games–Subscription, June 2021: Telco operators use cloud gaming to add value to 5G plans, Ampere Analysis, 14th July 2021