Let the games begin

As Netflix makes its move into the mobile games market, let’s take a look at what the boom in cloud gaming will mean for service providers.
Gaming sceme

A perfect storm of conditions is helping to drive the next big wave of opportunity for service providers … cloud gaming. Leveraging the increasingly faster speeds of both fixed and mobile networks – as well the lower latency of these enhanced networks – service providers are looking for additional means to drive revenues as well as capture subscribers.

Over the past 18 months it seems like everyone is getting into the gaming market, including webscale operators such as Amazon, Google and Facebook. However, what is notable are the growing number of service providers that plan to offer cloud gaming to their subscribers. 

Netflix announced it plans to offer mobile games to its subscribers in July 2021 – at no additional charge and with no advertising to add value to its service. With subscriber growth beginning to show signs of stagnation – combined with the onslaught of new video streaming services being launched seemingly daily – it is believed that the addition of gaming may entice new customers to sign up while reducing churn. In other words, Netflix might as well join the party rather than compete with gaming services for both audience time and money.

And this strategy appears to already be working. Just the announcement of plans to offer gaming, helped Netflix nearly double the number of new subscribers over the same quarter in 2020. The bulk of the growth came from EMEA, where Netflix is currently trialing its games in Poland, Italy and Spain. And on November 2, it announced global availability of its games to Android users.

And while this all sounds like Netflix wants to simply enhance the enjoyment of its services, rather than monetize it (in their own words), there are likely bigger aspirations down the road.

Why the initial focus on mobile games? It’s simple. Reach. There are far more people with access to mobile devices across the globe than game consoles. Additionally, Netflix can leverage its own technology and experience to distribute its games globally. And while Netflix is not currently known for gaming, it has rapidly built up a library of both global and regional specific original video content in a fairly short period of time and expects the same strategy will work for the development of games. 

Additionally, there is the potential for crossover between games and the shows it develops. A popular character on a series may find its way into its own game and vice versa. Furthermore, fans of a particular story may want to engage further or go deeper into a character’s backstory, offering an interactive experience that is expected to increase the hours of engagement for customers – a key metric for Netflix.

With over 200 million streaming subscribers (and their household members), Netflix already has a strong audience for its mobile gaming. But why not go after the two billion monthly mobile game players who, according to the GSMA Mobile Economy Report 2021, utilize their smart phones to play games?

A number of key drivers make mobile gaming appealing to service providers, including the rapid deployment of 5G networks that offer faster speeds and lower latency,
The next question is: How does it affect the mobile network?

The necessity of addressing cloud gaming has not gone unnoticed by the industry. 3GPP Release 16 addresses some of the foundational requirements necessary to support cloud gaming – including the need for more edge computing, power requirements, traffic management, mobility aspects and, of course, the need to support the latency requirements of gaming on both the downlink and uplink segments of the network. Release 17 will offer expanded capabilities. 

One application that continues to gain traction is network slicing. Since different applications have different traffic patterns and needs, different solutions are necessary for reducing and managing latency. Network slicing enables service providers to “guarantee” a good quality of experience for mobile gaming by creating a “gaming” slice with the necessary characteristics such as low latency and guaranteed high throughput even in a congested network in order to provide a differentiated (and revenue generating) service offering.

A number of key drivers make mobile gaming services appealing to service providers. These include the rapid deployment of 5G networks that offer faster speeds and lower latency; increase in cloud data centers that offer large compute and storage resources at the edge; continued strong adoption of smartphones; new cloud gaming services being launched as well as the emergence of new devices that offer AR, VR and XR capabilities.

From a consumer perspective, cloud gaming requires no download times or the purchase of expensive hardware. In many cases, it allows access to multiple games, rather than requiring the consumer to purchase individually – much like streaming video. However, similar to streaming video, latency and bandwidth are key and can make or break the experience. For example, NVIDIA’s GeForce NOW requires at least 15Mbit/s for 720p, 25Mbit/s for 1080p and 35Mbit/s for 1440p. It also requires less than 80ms latency from an NVIDIA data center, but recommends less than 40ms for the best experience. To help with the latency requirements, service providers such as Deutsche Telekom are relying on a decentralized EDGE cloud concept to keep the distance to the customer as short as possible.

One area of potential concern is bandwidth usage. Although the bandwidth consumed will heavily depend on your quality setting, it can range anywhere from 4Gbit to 15Gbit per hour. For a heavy user playing multiple hours a day could easily use up a significant amount of data each month.

The future of 5G might just be games

Mobile gaming presents a unique opportunity for 5G network owners to promote the advanced network capabilities of 5G to gaming service providers to form partnerships and create service offerings that are mutually beneficial to everyone – most notably the end user. Netflix’s entry into the mobile gaming space, sends a smoke signal to network operators that they might want to get a piece of the pie before it’s too late. Otherwise they will continue to build networks that enable consumers to buy and use services for which they derive no revenues. 

Let the games begin!

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