By Hicham Fadel, Jad El Mir and Johnny Yaacoub
Given its meteoric rise in recent years, it hardly seemed feasible that the video gaming industry could grow at an even faster pace. The COVID-19 pandemic has put paid to such a lack of imagination. With so many confined indoors, a remarkable one in five of the world’s population, some 1.5 billion people, have been playing video games every single day. Esports have surged in popularity, as have cloud gaming platforms. GCC telecom operators are ideally placed to capitalize on this flourishing market. To do so, they need to upgrade their infrastructure, form cloud gaming partnerships, capture the eSports opportunity, and invest in localizing content and developing games.
Gaming activity has skyrocketed during enforced lockdown. Verizon reported a 75% increase in online gaming during peak hours in the U.S., while stc recorded a 300% growth in gaming traffic in Saudi Arabia. The live streaming game platform Twitch clocked up three billion hours of gaming in the first quarter of 2020—its largest quarter ever. Hordes of customers hungry for gaming entertainment have devoured new releases. Newzoo now forecasts that annual global gaming revenue will reach over $200 billion by 2023, almost double the $118 billion figure of 2018.
“Games have now become prime venues for social events.”
The gaming industry has responded energetically to the surge in consumer demand. It has launched new eSports events and leagues, while streaming companies have rushed to generate and distribute fresh content by signing lucrative deals with their biggest content creators. The pandemic forced some professional players and leagues to move online. For example, Andy Murray and Rafael Nadal participated in the Mutua Madrid Open Virtual Pro, which replaced the Madrid Open tennis tournament this year.
Cloud gaming platforms have also proliferated in recent months, exemplified by Facebook launching a dedicated gaming app to take on Twitch and YouTube. This rise in cloud gaming has been accelerated by the rapid modernization of the supporting infrastructure. For example, the UK telecom company BT has formed a partnership with Google to provide cloud gaming. Meanwhile, industry players are planning major investments in product pipelines and mergers and acquisitions to consolidate intellectual property and grow, most notably in “hypercasual” games which boomed during lockdown. Also, new development companies, such as Sandsoft in Saudi Arabia, have emerged.
Games have now become prime venues for social events. For example, rapper Travis Scott opened his Astronomical Tour on Fortnite in April to an audience of 27 million gamers. Moreover, brands such as Nike and Louis Vuitton are continually innovating with their in-game advertising models, offering paid virtual apparel for avatars.
“Although they have made some ventures into eSports, GCC telecom operators have limited themselves to upgrading gaming infrastructure.”
With their large customer base, infrastructure, and marketing and analytical capabilities, GCC telecom operators should leap at these opportunities. They can also gain by creating, distributing, and marketing eSports content, for example through investing in brand sponsorships and advertising.
Although they have made some ventures into eSports, GCC telecom operators have limited themselves to upgrading gaming infrastructure. For example, Etisalat has partnered with Microsoft and i3D.net to enhance the gaming experience, while stc joined forces with Activision to host dedicated servers for “Call of Duty” throughout the Middle East.
There is a risk, however, that focusing solely on infrastructure improvements could be an own goal. By only looking at infrastructure, operators will help other companies reap the benefits of gaming, while they are reduced to spectators. Instead, operators should use gaming to monetize their infrastructure investments.
Take cloud gaming, for example. Cloud gaming relies heavily on the introduction of 5G because it needs high-speed, low-latency networks. As they are deploying 5G, operators can form partnerships with cloud gaming companies, grabbing the prize with both hands. That way, operators could allow their current, and potential subscribers, to enjoy quality gaming on any device.
“Operators can develop the necessary capabilities internally or form partnerships with regional developers to adapt global games to fit the GCC’s language and culture.”
At the same time, operators should get involved in eSports to bolster their brand among potential customers. As their global counterparts have been doing for some time, GCC operators can first associate themselves with eSports by launching leagues and partnering with eSports organizations and teams. Telkomsel and Garena jointly host the “Indonesia Games Championship 2020” eSports tournament. They can then immerse themselves by acquiring eSports content and organizations, teams, and players. If they do so early enough, they could make substantial gains if prices and transfer fees soar. Operators can also develop end-to-end capabilities for content production, distribution and localization, all packaged in an integrated platform.
Further down the road, operators can invest in localizing content and developing games, another way to make their brand more attractive to customers. They can develop the necessary capabilities internally or form partnerships with regional developers to adapt global games to fit the GCC’s language and culture. They can also take the reverse approach by joining forces with local gaming companies to create games for the region and the rest of the world.
With gaming growing so rapidly and establishing itself still further as a global cultural force, GCC telecom operators cannot afford to stand still.
This article originally appeared in Arabian Business, September 2020.