Holding on the promise of better connectivity, 5G technology is now seen to power up revenues amid the COVID-19 pandemic. The recent report by advisory firm ABI Research reveals by 2024, 5G alone will contribute revenues of almost $1.9 billion to cloud gaming (accounting for 42% of overall cloud gaming revenues) as well as US$67.5 billion in cloud video (accounting for 31% of cloud video revenues).
“These numbers underline the growing demand for cloud-based entertainment services,” says Leo Gergs, research analyst for 5G Markets at ABI Research. “As an important enabler for these new entertainment services, 5G will be critical for the telco industry to unlock these immense revenue opportunities and turn them into commercial reality.”
Remote working and forcing people to stay home also racks up the use of cloud-based tools not just in communications but in other aspects of business operations. Since people cannot go out, entertainment, such as video on demand and gaming, is also cloud-based.
Network operators across the globe are faced with a surge of network traffic by an average of 15% (up to 30% in countries like Spain and Italy). Measures like school closings are giving a bump to video gaming and over-the-top streaming markets, with platforms like YouTube and Netflix reporting an increase in network traffic of 15% and 16%, respectively.
Media enterprise use cases
“While due to current social distancing measures, most of these services will be consumed at home, using either mobile/fixed broadband or fixed wireless access. 5G will be an important enabler to transport these immersive media user experiences outside,” Gergs said.
The research said that network operators should target enterprise use cases within media and entertainment.
“If there is one lesson to learn from South Korean operators LGU+ or SK Telecom, it is the fact that revenues from the consumer domain alone will not be enough to pay off capital investment for 5G network deployment. That is why it is highly important for the telco industry to leave their comfort zone and advance to target media enterprise use cases,” Gergs said.
To address media enterprise use cases, infrastructure vendors and network operators need to fully embrace a service-based monetizing strategy and depart from a CAPEX intensive model. This should acknowledge the fact that large web-scale companies and edge providers like Microsoft, Amazon Web Services (AWS, through their Wavelength offering) push on to the media and entertainment domain to offer edge capabilities or individual network functions as a service. “If the telco ecosystem does not successfully target media enterprise use cases, web-scale companies will take over the domain and push the telco industry to the side,” Gergs said.