5g Monetization Mobile Cloud Gaming Report
5g Monetization Mobile Cloud Gaming Report
5g Monetization Mobile Cloud Gaming Report
ericsson.com/
network-slicing
Mobile
cloud gaming
Network slicing early
commercial use cases series
2 Ericsson | Mobile cloud gaming
Intro to 5G slicing
monetization
5G standalone is now being rolled out among leading Now we will cover the mobile (predominantly smartphone) cloud
communication service providers (CSPs) where 100 CSPs have gaming industry, the relevance for slicing, the value chain, business
committed to 5G standalone and some 25 have launched live models, a business case, who to partner with and how to offer and
networks. Thus the question about how to use 5G as the platform evolve mobile cloud gaming services. The vast majority of gamers
and how to use 5G standalone capabilities for new revenue play on a mobile device and even the hardcore gamers who use fix-
generating services is top of mind. Network slicing, which has been connected consoles also play a lot (50%) on mobile platforms. 60%
discussed for several years since the introduction by Ericsson, is seen of those who play weekly use a mobile device. In 2020 we counted
as a key enabler for 25% of these new 5G services—in particular 2.4 billion mobile gamers globally. (Ericsson Mobility Report 2020).
enterprise services, but also enhanced mobile broadband consumer In a ConsumerLab study, based on an online survey with 7,000
services like AR/VR and the next generation of mobile gaming. consumers, 90% of those who play video games at least weekly
were negatively affected by lag when playing, with at least 1 in 3
Several leading CSPs like Deutsche Telekom and Vodafone UK sometimes quitting as a result.
have already made proof-of-concept and public announcements,
and it’s likely that we will see the first commercial launches of The assumption and Ericsson’s standpoint is that network slicing
slicing-based services in 2022-2023. Remaining questions in the will have an important role to play for gaming services in general,
industry are increasingly about the CSPs’ enterprise strategy for like smartphone cloud gaming, PC/console cloud gaming, e-sport
industries to target and use cases to support. Alongside them are events and mobile AR/VR gaming. We believe that 5G standalone
questions on how to go to market, the business models and who to with slicing will have superior qualities versus other alternatives
partner with in the value chains. like Wi-Fi, 4G, 5G non-standalone, with the possibility to offer
guaranteed performance for the game being played. This will be
In 2021 we published two reports on the commercial value of particularly needed, as we will see more demanding AR/VR
network slicing and the top 10 industries and their benefiting games in the future.
use cases. One of those areas was media and gaming. This time we
will look deeper into the use cases mobile cloud gaming, remote
broadcast and production and campus-based services, that we
believe have a potential to be in the first wave of commercial
deployments.
Global cloud gaming subscriptions Msubs Cloud gaming service market BUSD
100,0 12,00
80,0 10,00
8,00
60,0
6,00
40,0
4,00
20,0
2,00
0,0 0,00
2017 2018 2019 2020 2021 2022 2023 2024 2025 2017 2018 2019 2020 2021 2022 2023 2024 2025
Performance
Slicing with standardized functions in the RAN and Core
and possibility to deploy the best network functions, plus
assurance functions in OSS where the performance is
<10ms Future AR/VR types of games will require
significantly higher speeds and shorter
constantly monitored end-to-end, will provide a high degree
latency possibly <10 ms
of guarantee. A guaranteed mobile performance (20-40 ms
latency, >20-25 Mbps) will drive demand. Future AR/VR
types of games will require significantly higher speeds and
shorter latency possibly <10 ms. This will create an agility
to adopt quickly to new services and end-user demands.
Reliability
Slicing can address network jitter, (preferably 0 +/- 10ms
std dev), which is a key gaming pain point.
Scalability
The ability to maintain the flexibility of public mobile network
to add/remove users with guaranteed quality of service..
Elasticity
Operators can more easily handle busy and off-peak times to
provide a consistent experience for gamers. As innovation in
AR/VR gaming happens, slicing will make it easier to cope in
case of a sudden high demand.
4 Ericsson | Mobile cloud gaming
Gamers
A new world of high performance games available on
the go rather than only on in-home consoles.
Trends in mobile
cloud gaming
The proposition for 5G mobile cloud gaming is
strongest in the casual and regular gamer segment
Intermittent market
Intense market
Regular gamer
2-5h
per week
Hardcore gamer
>15h
• Unified experience across mobile, console, other
• Play on the go (e.g. commute)
• Richer/more varied gaming experience than existing mobile games
• Cheaper alternatives to investing in high-spec gaming set ups per week
Cloud gaming is a new way of consuming video games that is gamers who play more than 15 hours a week. However, what will
set to grow significantly in the next five years. The ultimate goal matter the most in terms of performance requirements are what
is to enable people to play any game on any device as long as type of game that is played—e.g., multi-player real-time games
they have a good internet connection. This is possible because such as first-person shooters like Counter-Strike and car racing
the games (hardware and software) are hosted in remote data games will require low latency and low jitter.
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 5G will expand the market
gamers. This in turn puts high requirements on the connectivity The smartphone evolution, however, has opened up the segment
network especially in the case of mobile cloud gaming. Today’s of casual and occasional gamers driven by the cost and ease of
market is still largely based on download of the game either to use, who are estimated to stand for 60% of the gaming revenues
a console or a smartphone. Mobile cloud gaming is the case in the US in 2025 (STL Partners). Therefore, we estimate that 5G,
when 5G network will be used either to connect mobile devices enabled with network slicing, will expand the intermittent gamer
like smartphones or tablets or to connect homes via fixed segment who may desire easy access to more advanced games,
wireless access. on the go and at an attractive price.
Strengths
The CSPs are trusted connectivity providers
who have credibility with, reach into, and
knowledge of local consumer drivers and
behaviors. They can leverage this strength to
broker partnerships and drive sales motions.
Challenges
Are other players in the value chain who
are better positioned to engage game
developers and publishers, with more
knowledge of the industry, established
commercial models and prior relationships.
• Verizon • Zain
Connectivity
Mobile network operators; (Mass market) • SK Telecom • Everything Everywhere
Internet providers (Telco/ISPs); Gaming ISPs
• Singtel
• Xbox • Oculus
End device
Screen/ Smart TV; Set-top box mobile; • Apple/iOS • NVIDIA
PC; Console; VR headset
• Android
Fig 3 Mobile cloud gaming value chain segments. Source: STL Partners
In any case, operators should understand the objectives and This is driven, in part, by the move towards truly cross platform
pain points of potential partners in the value chain in order to play—consumers can play on any device running on any
understand with whom to partner and why. underlying infrastructure/connectivity.
We believe that that on top of connectivity, the first three If we look closer at the top three segments of the value chain, we
segments have the potential to deliver most value for the CSP. It’s see that overall they seek to deliver the best possible content with
not that connectivity isn’t valuable, and it’s not that we think the a supreme quality and user experience. They do face challenges in
top three layers are the most valuable overall. Instead we see that delivering sufficient quality of service over a mobile network and
partnership in the top three segments will provide more expertise, they don’t have access to network assets. This opens opportunities
gaming-specific knowledge and credibility, capabilities etc for for the CSPs.
CSPs looking to build out their gaming offering. As for the cloud
infrastructure and end devices, these value chain segments tend
to be more heavily commoditized and harder to differentiate.
8 Ericsson | Mobile cloud gaming
Possible partnerships for the CSPs Games engines and optimization services may allow the CSP to
As we described in the previous chapters, there are revenue create a holistic gaming wrap as to address games which require
opportunities for CSPs in several segments of the value chain, optimization/edge services. Partners bring an intimate knowledge
but regardless of the CSPs ambitions, they will have to partner of the technology and how to get the best customer experience,
with other players, and here we will outline the most important and this understanding will be essential to differentiate offerings.
ones. We believe that the top 3 segments have the potential to
deliver most value for the CSP. Potential partner profile
The potential partners to seek are those who are looking to build
Relationships with cloud gaming services enables the CSP a presence in a CSP’s local market. This could be by moving into
to bring gaming services to their consumers faster. This is the a new market with an existing service, or by launching a new
most important partnership for a CSP with high ambitions. service. CSP should seek to partner with players in the value chain
Partners bring knowledge, understanding, and credibility who bring either a strong content offering or a new capability to
within the space. By partnering with game publishers and address different market segments.
developers, the CSP can secure the best, popular and newest
content for gaming platforms. CSPs can secure a high-value
role as a content aggregator and pool resources to source the
best content across the operator group.
9 Ericsson | Document title Ericsson | Mobile cloud gaming
Cloud infrastructure
Connectivity
End device
As we can see, the CSPs are naturally placed in the connectivity They can partner with game engines and optimization service
segment, but they have possibilities to capture revenue in most of players to monetize the existing CSP customer base, depending
the other segments as well. The major full-service providers have on the types of gamers. Leading CSPs may have the cloud scale
opportunities in most of the segments in the value chain. They can to provide edge nodes for applications. Leaders may have the
white label or resell established cloud gaming services brands as market size and customer base to become effective resellers of end
a bundle. Some may launch their own services, but that will devices.
be more challenging. By offering APIs for slices to optimize
performance to game engines, they can partner or build their The local market challengers have medium opportunities in some
own PaaS solutions. Edge nodes for applications can be served of the segments in the value chain. They can resell existing cloud
to cloud infrastructure. Bundle connectivity packages can be gaming services and leverage existing gaming brands. There is
created with end device partners. probably a limited hardcore customer base for game engines and
optimization service deployments, but the B2B customers could
The mid-market leaders have medium opportunities in some of be targeted for sales. There could be some scope to monetize edge
the segments in the value chain. They can resell cloud gaming infrastructure, but this may rely more heavily on partners. There is
services, possibly as white label services. limited scale and reach into the hardcore gaming segment, which
limits the opportunity to resell end devices.reach into hardcore
gaming segment limits opportunity to resell end devices.
10 Ericsson | Document title Ericsson | Mobile cloud gaming
Monetizing Models
B2C (Non-exhaustive) B2B2C
Upgrade
gaming plan
Gaming
Subscription
Bundle offer
The major full service-providers will have greater potential to The mid-market leaders and the connectivity challengers have
serve regular and hardcore gamers in B2C, mainly because they a greater potential to serve the occasional and casual gamers,
have existing media and entertainment offerings and a reliable mainly as B2B2C. This is due to the intermittent market being
connectivity provider brand, which brings trust in this intense less focused on premium content and high performance and
market. Building their own gaming brand will be challenging, and more on variety of games, so there is less need for strong gaming
reselling or partnering with leading providers will likely dominate. credentials. They are therefore more willing to buy from a CSP.
The intense gamers are willing to pay for the best experience, and Intermittent gamers have fewer in-home set ups, and play
already make significant in-game purchases. primarily on mobile already, so there is no need for a fixed solution.
They are more likely to spend if offered a ‘Netflix-style’ gaming
Greater scale means these CSPs are seen as more attractive to package that provides a large variety.
developers, and can help build out the offering. There are more
resources available for marketing, gaming capabilities, and But the lack of a gaming brand means limited credibility with
premium content for hardcore gamers. They have an existing intense gamers. By selling slices through the game companies, they
gamer customer base through fixed offerings and a business can leverage their scale and gaming expertise. Less investment on
support system (BSS) for billing, which gives an ability to create a upfront marketing and brand building brings greater cost efficiency
unified gaming experience. that is more in line with the strategic objectives.
12 Ericsson | Mobile cloud gaming
This means that different CSPs have a predisposition to The mid-market leaders have less opportunity in the premium
different monetization models. The major full-service providers models, as they have less of brand and fewer attractive game
have a strong opportunity in all the four models, as they have partners, so they should focus more on the resell of games to the
a strong brand, capabilities, and attractive gaming provider mass market. The local market challengers should focus on mass
partners. They should consider tailoring their offerings based on market, which means less scope for “premium” models. A limited
the target customer segments. gaming brand means they should target bundled models.
in-game upgrade
5G gaming bundle
In-built in game
Findings reveal that a group of cloud gamers can pay up to Readers are encouraged to refer to the inCode study “5G Cloud
$10.99 more for a guaranteed gaming experience on top of their Gaming: Driving Revenue Growth For Mobile Operators” for
5G monthly subscription. Therefore, mobile operators can start further understanding on monetization and network impacts.
monetizing their 5G networks and driving up their service
revenues by targeting segments of their subscriber base—like
cloud gamers—with performance-oriented network slices.
13 Ericsson | Mobile cloud gaming
Go-to-market planning
and next steps
64%
In North America 64% (238 million) of
the entire population are mobile gamers
163M
Only 12 million are console only players but
some 163 million are multi-device players
As we have seen in this report, there are several commercial The leading CSPs have come to the stage where they have selected
considerations for CSPs, such as the choice of the target customer initial industries and use cases to explore, and they are now in the
segment, the choice of business model(s), and who to partner with. phase of finding partners and conducting trials with real network
This will naturally depend on the local market conditions where equipment.
the CSP operates, the gaming demographics and the popularity of
gaming overall, plus competition from others. Obviously, we believe that mobile cloud gaming will be a popular
use case, as it has wide acceptance and adheres to the CSPs’ core
In any case, it is crucial to start this journey of 5G monetization by consumer business. It may very well turn out to be a “must have”
making an analysis and strategy for the type of industries or use service if innovation in gaming, on top of 5G network slicing, leads to
cases to support. There is no simple answer to the very common very popular games with an appeal to broad consumer segments.
question—which use cases are the best?
In North America, 64% (238 million) of the entire population are
mobile gamers in some sense today, so there is a huge potential.
Only 12 million are console-only players, but some 163 million are
multi-device players.
14 Ericsson | Mobile cloud gaming
Define desired role in the gaming Validate target customer base Engage partners to help build solution:
ecosystem: and model:
• Identify, evaluate, and prioritize
• Define objectives for gaming, e.g., • Within the prioritized service area, partners to support gaming
new revenues, connectivity revenues, define target customer base, e.g., objectives, like building new content
brand building B2C: hardcore gamers vs casual and scaling
• Understand potential strengths and gamers, B2B: developers vs gaming • For slicing, focus on partners that
weaknesses in the gaming space services can help to build a gaming-specific
• Map the competitor ecosystem and • Size the potential market within the UI with reporting to show the value
conduct gap analysis within the target customer and right to play of the slice
market to identify opportunities and • Validate the proposition and model • Trials over 5G/slicing to gain
threats for slicing within the customer base proposition proof pointse
The output from these activities would The output from these activities would The output from these activities would
be a heatmap of opportunities tied back be market sizing within each area to be a long and shortlist of partners to help
to strategic objectives for the CSP within define the scale of the opportunity, and with both the gaming and slicing offering,
gaming, and 1 to 3 prioritized areas to a ‘go’ or ‘no go’ decision on the priority the initial engagement with partners, and
further develop. area and model. memorandum of understanding and a
reached proof-of-concept.
Explore Define & commit Build Launch & operate Ecosystem growth
Customer & partner Programme definition Iterate, intergrate Settlement New partner
alignment & business case & test & reporting on-boarding
Fig 8 Five Stages to launch and scale slicing based mobile cloud gaming Telco gaming and/or innovation and/or strategy team
Telco product development team with enabling partner(s)
Slicing operation team
Gaming team
15 Ericsson | Mobile cloud gaming
Conclusion
Mobile cloud gaming is estimated to be one of many use cases The global slicing-enabled revenue for gaming is expected to
to come from 5G and one of the first use cases to be explored at grow from 8 BUSD in 2025 to 19 BUSD in 2030, with a CAGR
scale, and several leading CSP are in trials today. of 19%. The CSP-addressable part is 7 BUSD.
Our estimations indicate that there is a positive business case, For mobile cloud gaming, the CSP-addressable revenue is about
provided that CSPs define their role in the gaming ecosystem 3 BUSD in 2025.
and value chain, and validate the target customer base and
Source: Ericsson and ADL 2021
select business model(s). It is equally important to engage
partners to help build a solution and deploy network slicing
on top of the 5G standalone network.
8Bn 19Bn
Global expected revenue growth
USD in 2025
Global expected revenue growth USD
in 2030
About Ericsson Ericsson enables communications service providers
to capture the full value of connectivity. The company’s
portfolio spans Networks, Digital Services, Managed
Services, and Emerging Business and is designed to
help our customers go digital, increase efficiency and
find new revenue streams. Ericsson’s investments in
innovation have delivered the benefits of telephony
and mobile broadband to billions of people around
the world. The Ericsson stock is listed on Nasdaq
Stockholm and on Nasdaq New York.
www.ericsson.com
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