The Critical Role of 5G Edge Networks for Media and Cloud Gaming Market

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3Q 2021 | IN-6270

Media and cloud gaming is a nascent market for telecoms with numerous limitations and challenges.

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Creating the Market Opportunity


5G edge networks are rapidly evolving and have the potential to transform the media and cloud gaming market and how we experience and consume digital and visual content. Media and cloud gaming use cases represent growth opportunities for the industry. For example, the video game market is now among the largest entertainment industries in the world, with more than 2.3 billion individuals who play some type of video game. The number of gamers is expected to continue to grow over the next five years and beyond, driven, in particular, by mobile gaming. To that end, Communications Service Providers (CSPs) are increasingly partnering with cloud gaming developers such as Google and Microsoft. This positions them in a much larger ecosystem beyond simply providing connectivity, thus raising the prospect of bringing new opportunities and revenue potential.

With media and gaming potentially creating new value, CSPs seek to invest accordingly and bolster their media and content business revenues with global partners. For example, LG Uplus has established a global alliance with Qualcomm, content developers, and CSPs to bring to market immersive content such as VR and AR with a foundation on 5G-based extended reality (XR). The purpose of this XR alliance is to produce – and monetize – immersive content so that the entire 5G ecosystem expands. Furthermore, NTT Docomo has set up its own “Docomo XR Studio” in January 2021 to develop volumetric XR video. To bring XR to reality, NTT Docomo needed a number of partners, from hardware to software vendors, to better fit 5G edge networks into media use cases and services.

Where Do 5G Edge Networks Fit for Media and Gaming?


The combined capabilities provided by 5G edge networks enable seamless streaming of media applications and services, and create innovative, immersive mobile games. 5G edge networks overcome challenges with unstable and unreliable connections by reducing the number of hops in the network and providing ten-millisecond latency. These pillars bode well for CSPs to differentiate their offer in multiple parts of the value chain. But the most important aspects for 5G edge networks that affect media applications will not be just about signal characteristics (e.g., speed, traffic encryption, jitter, bandwidth, latency). The impacts that 5G edge networks have on service development, product design, and purchasing are equally important. Specifically, the impact of 5G edge networks on media and gaming use cases extends on multiple strands as follows:

  • Impact on quality of experience—With the high bandwidth of 5G networks, even the most visually complex cloud games can show in a smooth and continuous fashion just as their developers intended. 5G can also introduce smooth playback to the cloud gaming experience when people share a connection. For example, multiple family members under one roof each engaged in their own bandwidth-intensive gaming activity.
  • Impact on game development—With 5G’s speed, high bandwidth, and low latency capabilities, developers have the ability to focus their efforts on developing for portability and better accessibility to better drive PC/console games for mobile adoption. Further, with 5G’s speed and low latency, processing power can shift to the cloud. This means that headsets can be set free from cords, and game graphics can be higher resolution to produce real and immersive experiences.
  • Impact on product design—Today, gaming is conducted via a PC, console, or a mobile phone, both of which carry processors and graphics cards on board. In the future, 5G edge networks can potentially enable games to be played on an even smaller “device” containing a small Central Processing Unit (CPU) and battery. What this means is that the processing power required to play a game can sit in a nearby edge cloud, rather than within the device itself. Edge compute will enhance significantly XR and multi-player location-based gaming use cases. Consequently, product designers may need to revisit how to design mobile devices and VR/AR headsets so that they are smaller and lighter forms.
  • Impact on speed and low latency—5G is potentially 20 times faster from a peak speed perspective. Consequently, with 5G, gaming data can be downloaded faster relative to the time it takes to download over a 4G network. Further, 5G also provides ms low latency. Typically, relative to 4G, 5G means that sub-10 ms latency can be reached with ease compared to 20+ ms. This difference may not seem like a long time, but it is on top of other activities that take place between gaming opponents.
  • Impact on games purchasing—Eventually, 5G and edge networks will augment commercial approaches for gaming that favor access, as opposed to game ownership, particularly for PC and console gaming. This marks a departure from the purchase patterns of the past when consumers paid upfront for games.

CSPs Must Seize the Opportunity


ABI Research estimates that for 5G, cloud video revenue is expected to increase from US$5 billion in 2019 to US$67.5 billion by 2024, at a CAGR of 67%. Additionally, the contribution of 5G technologies toward cloud gaming revenue from mobile phones is expected to increase from US$43 million in 2019 to almost US$1.9 billion in 2024, at a CAGR of 113%. So, the growth opportunity is there, but given the multitude of 5G edge network providers in the market, viable partnerships for media and gaming use cases will not emerge overnight. CSPs should acknowledge that the market will need to build critical mass and momentum. But first, the industry at large must coalesce into a single, vocal force in terms of interoperability to simplify the ecosystem and bring the best partnerships to bear that best commercialise 5G edge networks.

 Media and cloud gaming is a nascent market for telecoms with numerous limitations and challenges. Large telecoms with tens of millions of customers can potentially be hothouses for innovation and new growth in this market. But the common theme that CSPs must address for these opportunities to materialize is to break down existing siloes and operational hierarchy. For example, technological readiness, type of content available, right monetization models, and viable partnerships are some challenges that need to be addressed. Monetizing 5G edge networks may take some time. But that should not preclude the industry from making a step now and accelerating efforts at some point down the line. CSPs should recognize what current 5G and edge products can offer today and deploy them without waiting for mature and proven solutions.

Further, CSPs must work with ecosystem partners to determine viable partnerships particularly for edge platforms.  Edge solutions from major cloud players (Amazon AWS, Google, Microsoft) may have the upper hand in technology maturity. Edge and technology solutions from telecom providers (Enea Openwave, Ericsson, Huawei, Nokia, ZTE), on the other hand, support carrier grade requirements that have been the hallmark of telecoms. The dependence on technology supplied by these vendors limits the scope to differentiate based on technology features. But CSPs have other means to compete. For example, the combination of connectivity and edge to offer 5G edge networks is obvious, but CSPs can also combine edge networks with integration services, cloud, and security offered with different commercial and delivery models.