Cloud gaming has emerged as the top use case for 5G consumer offerings and there’s a good reason why. Mobile games are growing faster than console, PC, online and handheld games, and 5G offers the characteristics that enable the next generation of gaming.
5G networks have come to market and carriers are looking for ways to make money from their investments. 5G promises faster wireless data speeds and lower latency — two characteristics that play well into one consumer application: cloud gaming.
Cloud gaming is nascent but comes at a time when big gaming companies are making a move into the space. Rather than being tethered to a console, gaming users, in the future, will be able to access their preferred games over any device as their preferences and progress will be stored in cloud infrastructure. This has the potential to dramatically expand the audience for premium games. Microsoft’s Project xCloud is now in preview mode. Google is introducing its Stadia cloud gaming service on 19 November and many startups are entering the space too.
5G networks play an enabling role for cloud gaming, but how wireless operators and gaming companies will come together is still largely a mystery. We are already witnessing a myriad of go-to-market business arrangements in these early days. Microsoft has launched its preview of Project xCloud in partnership with carriers in the UK and US along with South Korea. A critical component of Microsoft’s trial is to better understand how its streaming technology works over 4G and 5G networks. For Vodafone in the UK, both 4G and 5G customers will trial the service, while T-Mobile’s LTE network will serve as the test case in the U.S. In South Korea, Microsoft has made an exclusive deal with SK Telecom, which will be an exclusive operating partner of Microsoft’s cloud gaming service in that nation.
Microsoft is a big player in the gaming space and has the clout to help push 5G-enabled cloud gaming forward. Microsoft’s partnership with SKT hints at more exclusive deals in markets where Xbox is weaker. Exclusives with U.S. operators don’t make sense, but alternative deals do. Operators in recent months have been hinting about a host of 5G consumer services that will come to market from third parties. Carriers are now looking at selling directly to businesses that then sell to consumers, known as a B2B2C model. A likely scenario for Microsoft in many markets is to incorporate 5G connectivity sourced from an operator or several operators as part of its own offering. We expect to see several B2B2C offerings with various business arrangements, ranging from carriers bundling third-party solutions themselves to powering bundles offered by others.
Another emerging model is the white-label agreement, whereby partners do the heavy lifting with a carrier-branded service, allowing the carrier to transition away from the service if consumer appetite is low. Recently, Swiss operator Sunrise announced plans to introduce a mobile-only 5G cloud gaming service in November in partnership with Gamestream. The service, called Sunrise Game Cloud 5G, will launch as an Android app that offers 4K streaming and will cost CHF 9.90 per month. Cloud gaming company Ubitus and Vodafone Italy have partnered to launch a new 5G gaming service called GameNow that is exclusive to Vodafone Italy customers. The service is an unlimited gaming service that is multi-platform with more than 60 titles to start.
When it comes to gaming, carriers should be open to forming several partnerships with third parties that have expertise in gaming. Those can include white label agreements, simple connectivity arrangements, and deals that involve more network elements, such as mobile edge computing (MEC).