Trends in mobile cloud gaming
Cloud gaming is a new way of consuming video games that’s set to grow significantly in the next five years. The ultimate goal is to enable people to play any game on any device as long as they have a good internet connection. This is possible because the games (hardware and software) are hosted in remote data centers, from where the game is streamed to the player’s device. Cloud gaming can therefore significantly reduce the cost of retail, packaging, delivery of hardware and improve ease of access for gamers. The development of new consoles is now slowing down or ending. This in turn puts high requirements on the connectivity network, especially in the case of mobile cloud gaming if user experience should be always good and when the evolution towards augmented reality (AR)/virtual reality (VR) takes off with even higher requirements.
CSPs need to consider different types of gamer segments like occasional, casual, regular and hard core where the hard-core gamers spend more hours and money.
The slicing proposition for mobile cloud gaming stakeholders
The 5G standalone, SA, the base on which network slicing is built, will enable game services the right performance end-to-end (E2E) unlike 4G or Wi-Fi. This gives the opportunity to offer a performance guarantee that’s attractive to both gamers and other stakeholders in the value chain.
Though generally centred around reliability, the proposition for slicing is nuanced across gamer segments. We believe that slicing has the biggest potential for the casual and regular gamer segments.
The prime reasons for this are because slicing offers:
- A guaranteed high-quality experience without the need to invest in additional, expensive equipment like gaming PCs or a console
- Reliability while on the go
- Ability to easily turn on and off the high-quality gaming service as needed as part of a pay-as-you-go service model (not tied to a lengthy subscription contract)
The cloud gaming value chain consists of several segments that all can benefit from network slicing. First and foremost are the game service providers like Steam, NVIDIA with GeForce, Now and Blacknut, who could increase the demand and reach scale by through bundled offerings with CSPs. The same goes for game publishers and developers, such as EA Sports and Ubisoft, who see an opportunity to evolve games because the console market is becoming saturated with less innovation.
Business models for CSPs
Today’s gaming offerings are mainly based on a resell and revenue share model using carrier billing. However, there are already leading CSPs who are investigating quality of service (QoS) based offerings, particularly all the big CSPs in South Korea.
Going forward, we see the opportunity for offerings in two dimensions: either as B2C or B2B2C on the one hand and as a premium or bundled on the other. This gives rise to four possibilities:
Data plan upgrade (premium B2C), where the gamer buys a dedicated game subscription to be used for games bought from game service providers.
In-game upgrade (premium B2B2C), where the CSP sells slice to game provider or publisher, who possibly markets the game as premium with carrier billing.
5G gaming bundle (bundled B2C), where the CSP resells cloud gaming service with upsell of 5G + slicing data plan.
In-built in the game (bundled B2B2C), where the CSP sells a slice to the game provider or publisher, who markets the game where the gamers get access to the embedded slice with better user experience each time that game is played.
The choice of model depends on the CSP’s strategy, size and position in the market. A major, perhaps global, CSP with many subscribers, existing gaming position and a well-known brand will be in a better position to create partnerships and get access to the most popular games, meaning its highly likely they could have success with all four models. Whereas a smaller local CSP with a less known brand, may likely have a better opportunity in the bundled offerings with more focus on mass market and resell. That said, it’s proven difficult for any CSP to compete by setting up an own branded gaming offering, so the trend is towards partnering and leverage leading gaming provider brands.
Go to market planning, and partners to work with
If we look closer at the top three segments of the cloud gaming value chain: cloud gaming services providers/game publishers, developers/game engines and optimisation services, we see that overall they seek to deliver the best possible content with a supreme quality and user experience. However, they face challenges in delivering sufficient quality of service over a mobile network and don’t have access to network assets. This opens opportunities for the CSPs. The steps to commercialization enabled by network slicing for the CSP are to:
- Define their role in the gaming eco system and value chain
- Validate the target customer base and select business model(s)
- Engage partners to help build a solution and deploy network slicing on top of the 5G SA network.
Mobile cloud gaming is estimated to be one of many use cases to come on 5G and one of the first use cases to be explored at scale and several leading CSP are in trials today. Our estimations indicate that there is a positive business case. A majority of gamers use mobile platforms, with hard-core gamers spending about 50 percent of their time on mobile.
For more info and details on all the topics in this blog post and more, please read our newly published report Network slicing early commercial use cases series: Mobile cloud gaming.
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