As 5G rolls out further advancements in the Media & Entertainment market, it is essential for CSPs and telecoms to become strategically involved in further developments.
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Verizon Delivers First Keynote at Video Gaming Event E3
In June 2021, Verizon participated in their first ever Electronic Entertainment Expo (E3), the annual large-scale trade event for the video game industry. Their keynote during the event highlighted how 5G and Multi-access Edge Computing (MEC) would bring about new opportunities for the Media & Entertainment industry, citing partnerships with multiple gaming companies, sports organizations, and developers. These include partnerships to further test and establish new gaming standards leveraging 5G’s enhanced mobile broadband (eMBB) and ultra-reliable low latency communications (URLLC) features, as well as virtual reality (VR) experiences that provide viewers with immersive sport experiences even when they are not able to be physically present at the venue. Verizon has also highlighted partnerships and involvement in the Non-Fungible Token (NFT) space, working with Dignitas, an electronic sports (eSports) organization, to produce and host hologram NFTs that can be viewed in augmented reality (AR).
5G Brings Swaths of Opportunities in Other Sectors
The relationship between telecommunications and the Media & Entertainment industry is not a new one. When 3G was rolled out in the early 2000s, the Media & Entertainment industry stood to benefit as mobile phone screens got larger and could support color and higher data rates that enabled new applications. We see the same pattern occurring for 5G, which will enable new use cases for the Media & Entertainment industry.
Some of these use cases include AR and VR, which are forecasted to be multibillion-dollar industries by 2026. ABI Research has a detailed forecast for both of these technologies found in Augmented and Mixed Reality Market Data: Devices, Use cases, Verticals, and Value Chain and Virtual Reality Market Data: Devices, Verticals, and Value Chain, and expects that both the Media & Entertainment industry market for AR and VR market for gaming (excluding hardware) will be worth US$32.9 billion and US$6.5 billion respectively in 2026. Indeed, 5G will be an enabler for AR and VR applications, offering high downlink and uplink bandwidth, which is needed to deliver quality graphics, as well as MEC deployments and URLCC which reduces latency– a critical need for VR to not create motion sickness for its users. Enabling these new use cases will allow Communication Service Providers (CSPs) to break into new opportunities, such as creating new services and business models. One such example would be the BT Sport Ultimate App, which with the use of the new 5G-enabled iPhone 12, allows users to add real-time AR interfaces to their sports games, allowing them to track players and trace shots.
Another opportunity that 5G brings to the table is cloud gaming. Utilizing edge computing and high bandwidths, users can potentially no longer require heavy duty graphics cards for their PCs or own high specification mobile phones for gaming purposes, but instead, rely on the computational power of the cloud to deliver their gaming experience. In this use case, the edge platform is crucial, as it would be responsible for uploading and transmitting player’s movements into the gaming device, and low latency must be achieved for a smooth gaming experience, which would be a key criterion for eSports. Such a use case could potentially disrupt the mobile phone market as well, allowing commercial off-the-shelf (COTS) mobile phones to support heavy duty applications, reducing the price points of mobile phones and PC hardware for gaming. In this space, we will see cloud players such as Amazon Web Services (AWS) offering edge solutions like Wavelength, competing, and collaborating with CSPs to realize this market potential.
Scalable and Future-looking Edge Strategy is Needed for Telecoms
To capitalize on this opportunity, there needs to be the necessary network infrastructure in place. For Media & Entertainment use cases where there is a stark contrast between peak and average network usage, cloud native and virtualization techniques need to be in place for isolation and scaling of network functions for efficient and automated allocation of network resources. Furthermore, CSPs and telecommunication Network Equipment Providers (NEPs) will need to have a smart go to market strategy in order to leverage on the Service Based Architecture (SBA) defined by 3GPP for their 5G core and edge to enable these use cases, lest hyperscalers disintermediate CSPs by monopolizing the whole value chain.
The edge is a crucial component to enable use cases in the Media & Entertainment industry due to the high need for low latency. In this space, the value chain can essentially be broken down to three main components: the MEC cloud infrastructure (including hardware and NFVI), the MEC platform itself, and the application layer which connects the edge apps to the cloud (either public or telecom). Usually, the CSPs deploy their own MEC cloud infrastructure and platform and utilize hyperscaler platforms such as Google Anthos or AWS Wavelength as the application layer. Such an arrangement has been trending (e.g., SKT MEC on AWS, Verizon Edge using AWS, and others), and plays to the strength of each stakeholder– CSPs providing the connectivity piece and hyperscalers providing application developers with a consistent platform for them to deploy applications at the edge (using public cloud tools, APIs, and features).
However, CSPs miss out on a larger part of the market if they do not innovate and are relegated as a connectivity piece. In order to capture value, CSPs need to synergize with hyperscalers that are providing the application platform, through working out new revenue sharing models or create scalable business models such as consumption-based pricing (read more here: ‘Tis the Time for Consumption-Based Economics in Telecoms) for 5G features such as network slicing, URRLC, etc. Ideally, CSPs should work towards entering the application layer space themselves, working directly with developers and content creators. However, this would require many fundamental changes in the way CSPs think and work, as this will require them to have their own DevOps and developer ecosystem. While it will be hard for CSPs to compete directly with hyperscalers in capturing the developer market immediately, some CSPs such as Rakuten and Jio are slowly moving towards that direction.