Posted by ABI Research
While 2019 has seen the first deployments of 5G in the consumer domain, 2020 will be the year of large scale commercial 5G rollouts across the globe. In line with this, 5G generated revenues for cloud-based entertainment services is forecasted to rise sharply until at least 2024. As newly forecasted data by global tech advisory firm ABI Research reveals, by 2024, 5G alone will contribute revenues of almost US$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.”
The current situation around countries imposing social distancing in order to fight and delay the outbreak of Covid-19 is exacerbating the demand for cloud-based entertainment as well as remote video applications, such as remote education services or video calling platforms. Network operators across the globe are faced with 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. “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 explains.
In order to truly succeed in the media and entertainment domain, however, it is vitally important for network operators and infrastructure vendors to target enterprise use cases within media and entertainment. Gergs states, “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.”
To triumphantly 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 concludes.