An expert perspective on cloud gaming trends and partnership considerations for telecom operators
One of the most significant new revenue opportunities facing telecom operators in the coming years is cloud gaming. With the growing shift of gaming to the cloud, and the range of available cloud gaming providers growing day by day, telecoms need to take key considerations in mind when approaching gaming partnerships.
To share leading insights on recent trends on cloud gaming and partnership considerations for telecom operators, we sat down with Match-Maker Angel Gyurov.
Why is gaming moving to the cloud? What are the advantages?
Gaming has been shifting to the cloud for ages, and it’s no surprise when you look at the trajectory of the industry over the recent decades. Since the dawn of mass market PCs, gaming kept evolving year after year to reach today’s level, responding to customer demands for convenience, changing consumer device technology, and growing competition on price and gaming quality.
I remember my first experience with gaming: in the 1980s, I played games like F1, Karateka and others – I know that the young folks who will read this interview will laugh, but these were the huge games back then. And gaming was different – clunkier, more expensive, and more difficult to access.
In the decades since, I have played hundreds of games on PC, PlayStation, tablets, and smartphones, and my conclusion after all these years of playing is that gaming has never been as affordable and accessible as it is today. The major reason for this? The movement of games to the cloud.
More than any other technological shift in gaming, the shift to the cloud has drastically impacted the price and user experience of gaming, and it will continue to do so in the coming years. The shift to the cloud has brought the cost of playing down to few dollars per game, or even a few cents, depending on how users are accessing their games. You can now play easily from anywhere via 5G or high- speed broadband using your smartphone, tablet, laptop or even your smart TV.
The shift has not been without its challenges, and as much as gaming providers have needed to improve technologically to enable cloud gaming, there have also been changing technical requirements on the user side. Games are much more rich – much “heavier”- than before, and this requires greater bandwidth, low latency, and speed.
The result of the move to the cloud has been easier and better gaming for users, and expanding gaming “use cases”: gamers can play together online in tournaments, closed groups, and on-the go.
What is the market outlook for cloud gaming? Is it likely to grow in popularity in the coming years?
According to analysis from Omdia, cloud gaming is booming, and in 2022 it is accelerating faster than ever. In 2021, consumer spending on it tripled compared with 2020, and the coming years are set to see an even steeper growth trajectory.
And this growing popularity is a signal for others in the market to get involved. The number of cloud gaming partnerships is increasing – the rate of these partnerships was 5 times higher in the last 3 years than ever before. The biggest growth has occurred in APAC, Europe and North America, but I am sure other markets will soon catch up, especially the Middle East.
In the next decade, 90% of the gamers will move to cloud, and this is an inevitable process. The fact that all big names in the market are moving into cloud gaming is a clear indicator of the future of gaming.
What role should telcos play in the future of cloud gaming? Why
should telcos get involved in this topic?
Telcos are the natural partner of cloud gaming companies. They have the customer base, they have the relevant infrastructure to support gaming, and they provide the data bandwidth that gamers play on.
At the same time, telcos are under huge pressure to maintain or grow ARPUs, which is not easy with the declining revenue from traditional services. So there is a challenge in front of operators – they need to add more and more value to their offers, and they need to be attentive to the trends on the market in order to ensure their offers are relevant for customers. Like video/streaming content before it, gaming is the next step for telcos seeking new revenues.
Some telcos are already realizing the potential of cloud gaming. More and more telcos are initiating partnerships with gaming providers to enrich their product offerings and attract the younger generation of customers. The new offer enables them to keep maintaining the prices, steady or increase ARPU, and build a full media ecosystem around their customers to lock them in longer term. So overall, cloud gaming provides huge opportunities for telcos to grow their business.
What factors should a telco consider when selecting a cloud
gaming partner?
There are few key factors that telcos should keep in mind when considering a potential cloud gaming partner. With many players in the cloud gaming market pursuing partnerships, it is important for telcos to be discerning of which partner they should move forward with – from a user experience, commercial, and technical perspective.
With regards to user experience, it may sound obvious, but the cloud gaming platform’s UI and UX in general is critical – after all, if the gaming experience is poor, then users will either fail to opt-in to the service, or drop-off fast after signing up. In today’s fast-paced world there are millions of games, and users can switch easily if they don’t like the experience.
In the world of cloud gaming, the key factors impacting UX are the convenience of getting started with a given service and the latency and quality once the service is running. With too-high latency, gamers are doomed to lose, and with poor graphics quality, the gamer misses key elements of the gaming experience. Services offering less than 1080p HD gaming will fail to meet user expectations on quality.
Beyond the technical ability of a service to deliver on UX expectations, telcos should pay close attention to the game library of potential cloud gaming partners: even if you have the best technology, if the game library is poor, no one will ever pay to play games that they don’t like. This means that not only the quantity of games is important, but also the quality and popularity of those games. Who cares if a service offers 1000+ games, if those games are not in demand from consumers? Without availability of the most popular games and AAA games, the best gaming experience is not possible. Telcos must be sure before signing a contract that their gaming partner will have the best library at least for the next 3-5 years. And beyond content, telcos should seek gaming partners that are also future-proof from a growth perspective, with proven technological scalability to cover a growing customer demand.
Finally, telcos should evaluate the potential business model offered by cloud gaming partners. From my industry experience, it is clear to me that telcos may not always be keen to pay big money upfront unless there is a clear ROI, since they have constant heavy investment into mobile and fixed infrastructure to support their core services.
Therefore, in many cases operators prefer models that enable them to spread out the resource commitment for the service. Most attractive are revenue share models that reduce upfront risk drastically and offer strong potential as a low-risk new revenue stream.
Of course, not all providers can deliver on these criteria – so it is up to telcos to sort through the market and identify the strongest opportunities. Luckily for telcos, Match-Maker Ventures is here to help them in this regard.
Interested in learning more about cloud gaming opportunities for telcos?
Match- Maker Ventures portfolio scaleup Boosteroid is a globally leading cloud gaming provider, with millions of B2C subscribers and growing B2B2C deployments with partners including leading telcos. With optimized gaming experience, a library of the most popular video games on the market, and industry-leading technical infrastructure offering scalability and premium quality, Boosteroid is enabling partners to seize on this market opportunity and bring cloud gaming to their customers.
About Angel Gyurov
Angel is an executive level telco and digital professional with more than 20 years of experience on international level in Europe and Middle East, having held various leading positions at companies like Ooredoo Qatar, A1 and Neterra Telecommunications.