How Cloud Gaming Can Be the First 5G Killer App

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Jean Lawrence, senior director of product marketing, Oracle Communications (Apps), talks about 5G networks, As service providers are looking to generate a return on their investments by monetizing new business models, 5G killer apps like cloud gaming hold the key to unlock new revenue sources.

A decade ago, at the dawn of 4G, nobody really envisioned how Uber, Facebook, Netflix and other disruptors would take advantage of 4G network capabilities to launch mobile-friendly business models and create huge new revenue streams. Unfortunately for the communications service providers, they captured very little of the value derived from the billions of dollars they invested in 4G networks.

5G Killer App

The industry is at risk of making the same mistake again. In fact, according to the Omdia 5G World 2020 Global Insights more than half of service providers who have launched 5G networks still don’t know how they will make money from them. Service providers must uncover the next killer apps and position themselves at the center of the value proposition so they can retain customer relationships and drive new revenues. 

Among the best candidates to be the first 5G killer app is cloud gaming. Why? Stay at home orders during COVID-19 gave gamers more time to play and accelerated next-generation gaming experiences like mixed reality. 

Digital gaming is already a high-growth, high-margin sector and cloud gaming is expected to grow from 3 million active users in 2019 to 177 million active users in 2024, according to Analysys Mason report,  The Cloud-Gaming Opportunity for Operators, 2020.

The lag, or delay, in a digital game can make or break the gamer’s experience as he or she is racing at high speeds, precision passing a ball, taking down an opponent, or experiencing an augmented reality game avatar. The very low latency of 5G networks can transform gaming and make it the first 5G killer app. 

In fact, many leading online gaming providers are increasingly partnering to deliver live events – such as Travis Scott’s five-day concert event on Fortnite which drew more than 45 million users – making 5G’s low latency and quality of experience another important factor for gaming providers.

Learn More: Cloud Gaming Will Make Consoles Obsolete, But Will Game Developers Be Better Off?

Multi-Sided Business Models

To unlock 5G revenue from cloud gaming, service providers have two categories of opportunities to engage in multi-sided business models. 

One is to provide 5G connectivity to gaming companies that then offer a low-latency experience to the end customers. In this scenario, service providers may offer dedicated network slices to gaming companies who would act as mobile virtual network operators and hold the primary relationship with the end gamer. This means that service providers can generate revenue from gamers who are not already subscribers to their network.

The second is to lead a partner ecosystem and move up the value chain in a B2B2C business model. Rather than simply providing 5G connectivity as a service to gaming companies, in this scenario service providers retain the primary relationship with the customer and bring in partner gaming companies who are eager to tap into the service providers’ customer base. This allows gaming companies to take advantage of the service providers’ operating infrastructure: marketing, ordering, billing, revenue settlement, and care. 

The Cloud Gaming Experience

Let’s take a look at how service providers can engage with cloud gaming companies to co-create and deliver a compelling, 5G-enabled experience.

It starts with defining the gaming offers. Service providers may seek to entice occasional gamers with a “pay as you game” package that includes 5G access to a library of games, charged per minute. For the lifestyle gamers – and as a future upsell to occasional gamers – they may offer an unlimited gaming package with premium games and a specialized 5G low latency slice that guarantees a lag-free experience. They can also add on gaming controllers as 5G phone accessories to optimize the playing experience.

The service provider then designs and deploys the 5G network slices to support these cloud gaming offers. The casual gamers would be placed on an enhanced mobile slice whereas lifestyle gamers would use an ultra-low latency slice with distributed real-time charging at the network edge.

With the network and offers in place, the service provider can then use their marketing tools to offer personalized ads to customers whose digital profiles indicate an interest in gaming. Interested gamers can sign up for the cloud gaming offer of their choice on the channel of their choice, such as an app or a web browser, and then receive their controller and begin to play. Digital or live assistants can provide answers to the gamers’ questions, billing clarifications and network outage information.

As gamers enjoy their experience, the service provider uses real-time charging capabilities to track which titles are played from which gaming studios and for how long. The service provider then settles the revenue among the members of the gaming ecosystem based on their commercial arrangements.

When service providers combine the power of their 5G network investments with an operating infrastructure that enables this full lifecycle, they are well positioned to lead the B2B2C business model and capture the full value of 5G.

Learn More: A Safety Net for 5G and Edge: How OOB Network Management Helps Create More Resilient Networks

Charging: Bridging the 5G Experience

In this cloud gaming killer use case and other emerging 5G scenarios, a real-time charging capability plays a key role in bridging the 5G network capabilities and the 5G customer experience. This is what enables real-time balance notifications for customers as well as the complete revenue management to monetize these services for service providers and their partners. 

Service providers are at a now-or-never moment: will they repeat the 4G playbook and become marginalized in their own industry, or will they move up the value chain and lead new business models enabled by their 5G networks? Now is the time to identify the next killer apps, like cloud gaming, and put the capabilities in place to drive new revenue streams.

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