MWC22: Metaverse may be the future, but gaming offers telcos tangible opportunities today

With MWC22 set to go ahead next week, it can be confidently expected that the event will be loaded with stalls promising metaverse-related developments, from the concrete to the somewhat speculative. The role of telcos in?providing?the metaverse’s gargantuan data transmission needs will also serve as the conference’s bubbling undercurrent. The likes of Meta, Microsoft, and Tencent are committing billions of dollars for building the metaverse, but we are all still very long away from a consensus on what the metaverse is, how it will function, and how companies will generate revenue from it.

In recent years, games such as Fortnite and Roblox have emerged that seek to offer a range of entertainment, social, and cultural activities inside their own worlds, while also providing a functioning economy that includes commerce between users and from other brands. Companies specializing in AR and VR will claim that these technologies are the nexus of the metaverse, but at Omdia we argue that it’s games – with their natural immersivity – that makes them strong starting points for metaverses. Companies well-positioned in gaming’s value chain will likely find themselves similarly well-positioned for the metaverse.

Nevertheless, the lure of the hottest tech buzzword will be impossible to resist at MWC, and most service providers will feel compelled to at least name-drop it throughout the event. Given their important role in the broader ecosystem, they’re well within their rights to voice their perspective on how metaverse might shape up. Before the metaverse is realized, however, Omdia believes that gaming can offer telcos many tangible opportunities today.

The gaming market will be worth $182bn in 2022, which is set to grow to $206bn by 2025. Thanks to its accessibility and huge variety, gaming has become ubiquitous around the world, appealing to all age groups and genders. Omdia recently conducted two surveys for Digital Consumer Insights 2021, providing insights into over 13,200 consumers and 245 service provider executives across 12 countries. In many ways, the findings support our outlook on how gaming is set to evolve in the context of connectivity and what opportunities it offers to telcos.

According to Digital Consumer Insights 2021 – 5G, Broadband, & Bundling, 80% of households played online games in the past 12 months – similar to listening to music (84%). Remarkably, half of those who play online games said that their and their household’s use of online gaming services increased over the last 12 months.

Games underwent a huge digital transition over the past 25 years – growing from the early days of PC multiplayer gaming in the 1990s, through to the rise of social media and smartphones in the late 2000s. Spend on digital downloads and mobile apps now far outstrips that of physical games; constant internet connectivity has become the key feature of gaming today.

In the adjacent categories of music and video, streaming subscription services have rapidly become dominant over the past decade, which has fundamentally shifted consumer behavior around how we pay for, and enjoy, entertainment content. Starting from 2019, game subscription services and cloud gaming have experienced a renaissance, with the consumer spend predicted to nudge $12bn by 2026. It therefore isn’t surprising that according to Omdia’s DCI 2021 survey, 21% of respondents said that they had used some form of paid subscription gaming service such as Apple Arcade, PlayStation Plus, or Xbox Game Pass.

Findings from Digital Consumer Insights 2021 – Service Provider indicate that more than a third of service provider executives believe that gaming offers their companies one of the biggest opportunities. More specifically, the top three areas in gaming as identified by those service provider executives were:

1. Evolving traditional mobile gaming offering to cloud gaming: As laid out above, this has already been set in motion, with cloud gaming services coming into force and seeing real consumer uptake. Apple and Google’s dominance of app stores has left little room for service providers, but cloud gaming will enable them to play a bigger role.
2. Providing premium connectivity services that improve the gaming experience: In Omdia’s DCI survey, 78% of gaming service subscribers indicated that they would pay extra for an online gaming service where gaming traffic is prioritized to offer best quality – suggesting that there is an appetite, at least from dedicated gamers.
3. Utilizing gaming as a promotional tool for 5G and FTTH: According to Omdia’s Cloud Gaming Partnerships and Bundles Tracker, 64 (or 28%) of the 230 active cloud gaming partnerships globally involve network operators. Video and music content was successfully utilized to drive 4G uptake in the past, and now cloud gaming is being used to upsell existing subscribers to 5G and fiber tariffs.

Following MWC, we plan on producing a report exploring these and other near-term opportunities, which service providers can take to enhance their position in gaming. It will be created in collaboration between Omdia’s Games and Service Provider research teams. The report will also analyze the challenges faced in this highly competitive space, while providing case studies of successes and failures so far.

A large team of Omdia analysts will be attending MWC in Barcelona next week, including experts in the areas of Media & Entertainment, Service Provider, IoT & AI, and Security. Feel free to get in touch if you would like to speak to us during or after the event. Meanwhile, you can download Omdia’s ‘MWC 2022: What to Expect?’ report today, for free! It includes insight from our specialists to about what you can expect from MWC 2022 and who the key players to watch are.

Omdia’s Digital Consumer Insights 2021 surveyed over 13,200 consumers across 12 countries on the topic of 5G, broadband, and bundling. It also surveyed 245 service provider executives on the subjects of FTTH, 5G, advanced communications services, online video, gaming, smart home, and financial services. Omdia clients can access the reports as part of our Digital Consumer Insights Spotlight Service.