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Operators continue to investigate how gaming can add value to entertainment platforms
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5G network slicing could play a role, but who would pay?
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The opportunity is out there, but strategies still need to be worked out
In 2020, Deutsche Telekom launched its MagentaGaming offering in Germany to great fanfare, positioning it as a cloud gaming service that could have become a template for the rest of the group. Two years later, the service was canned owing to disappointing take-up among customers.
Fast forward to 2024, and cloud gaming as an alternative for gamers who don’t want to buy computer gear remains a difficult service for telcos to get right. It not only requires high broadband speeds, but also low latency, which is particularly challenging.
In addition, it’s not entirely clear how cloud gaming can be scaled to suit the different needs of customers, from those who play Candy Crush on their mobile phones to the more serious, regular gamers that would require 5G or fiber, nor how it should be positioned alongside more traditional video content.
During an IBC365 webinar this week, titled The Collision of Gaming and TV, executives from Deutsche Telekom and Verizon discussed the strategies they have attempted to date, the role that 5G standalone technology and network slicing could play to support cloud gaming, how gaming fits in with their pay-TV strategies, and lessons they have learned along the way.
Early learnings
As senior commercial product manager for TV at Deutsche Telekom, Mike Echternach is in charge of product enhancements and business value prioritization for DT’s TV product portfolio across its European footprint. “So gaming is one of the topics on my table,” he said.
He also has prior experience in gaming as DT’s TV and gaming partnership manager for accounts such as Microsoft Xbox, PlayStation, Apple, YouTube, Twitch and ESL FaceIt Group.
Echternach conceded that MagentaGaming had failed in part because the operator was not in a position to continuously invest until the market had reached a certain size.
The group therefore switched to a partner-led, content aggregator approach. “The decision in terms of our entertainment strategy is mainly to extend our TV aggregation to a more broader entertainment aggregation, which means [adding on] gaming subscriptions to the package,” he said.
For now, DT is currently “trying out things” on a smaller scale in order to see what might appeal to different customer groups from gamers through to eSports enthusiasts, and how they can be best served by the network.
Meanwhile, Blake Lewin, product manager for gaming & entertainment at Verizon, said cloud gaming “provides a tremendous opportunity for the future, because … you’ll be able to play games that would not be able to run on any single device.”
However, Lewin believes there is still a need to educate the audience about why cloud gaming is important. “It’s not the technology, it’s all there,” he said. “We’ve used it in various different ways. It’s the user behavior. People consume games differently than they consume video media specifically.”
He added: “We’re moving into this idea of living games, games as a service. Think Fortnite, Roblox, they’re huge. And people tend to pick their game, and stay there and play in it rather than just consuming 10, 20 or 30 different games a week.”
The role of 5G
Before joining Verizon, Lewin held a number of positions, including at Ericsson, that focused on the development of immersive games as well as augmented reality, virtual reality and simulation products for training and education.
“My history was in cable, but on the gaming side and so the battlefield is strewn with the bodies of this attempt to bring gaming into a subscription service into cable operators,” he commented. "It’s a very difficult product for pay-TV operators, cable operators to get into because the gamer is a very different audience and a very different use case than video consumption. I’ve been trying to bring interactive content to TVs and other devices for a long, long time.”
Lewin then joined Verizon in late 2021. “The reason I want to be at Verizon is because 5G is the solution that we’ve been looking for in terms of the real-time distribution of gaming,” he said.
“You do need low latency, but you also need reliability, high throughput, and there’s a bunch of other factors all in that system. But cloud gaming basically means that the network as a platform is where gaming is taking place. It’s a critical part of the success of cloud gaming, and the future of metaverse, spatial computing, or whatever,” Lewin said.
Echternach agreed that standalone 5G provides an opportunity to serve gamers with a network slices that offer characteristics such as very low latency, for example. The biggest challenge, he said, is how to monetize this. “Does the customer want to pay for it? I’m not sure,” he said.
He also pointed to net neutrality regulations in Europe that do not allow operators to treat network traffic differently. These regulations have already forced operators to close down zero-rated services, for example, such as DT’s StreamOn offering that included gaming.
So what is the best strategy for the time being? “I would say, know your target group, get engaged. And then pick the group and the business model and service or product … that really fit this this type of group you’re targeting,” Echternach said.
Lewin also said it is important to “really understand your audience and where they’re not getting served right with games. The gaming audience is huge. There’s lots of different gamers, lots of different play styles. What is the need, that your viewers, your consumers, your audience has for gaming, and then cater to that.”
The game is still on
According to a 2023 report from Omdia, while telco enthusiasm for cloud gaming has cooled, it’s far from game over. The research company said cloud gaming and subscriptions will become an increasingly important part of the games market, where it will mostly complement, rather than cannibalize, the growth of the entire sector.
As commented by George Jijiashvili, senior principal analyst, games at Omdia, “as cloud gaming is integrated in popular entertainment services in the future (such as Netflix), the ability to stream games will become so ubiquitous that millions will be unknowingly playing games in the cloud. This anticipated development will present both challenges and opportunities for telcos, requiring them to adapt and capitalize on the changing landscape.”
Ericsson also recently published a report on cloud gaming and the role that operators can play. The vendor’s advice to operators is that they should move away from acting merely as resellers of cloud gaming platforms and introduce new pricing strategies that resonate with the varied gaming segments.
“CSPs could be active in all the customer journey; from creating awareness and interest for cloud gaming, to make sure the conditions are the best for consumers to consider trying cloud gaming,” the report said.