Gaming is the new video: gamers’

behaviour and operator opportunity

August 2022

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Authors
Anshu Goel, Senior Analyst, Fixed, TV and Convergence
Andrey Popov, Analyst, Digital Consumer
Pablo Iacopino, Head of Research and Commercial Content
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1 Executive summary

2 Context

3 Analysis

4 Operator case studies

5 Related reading

3
 Shape of the market

Gaming is changing shape. Digital gaming – a popular pastime for people of all ages – is being reshaped by various developments. This

1
includes the shift to streaming, the rise of the subscription model and the integration of emerging technologies such as cloud/edge, 5G and
blockchain. There is a gradual shift from consoles and PCs to mobile streaming, which mirrors video’s move from physical media/linear to
streaming. Also, like with video streaming, the subscription model (largely cloud streaming–based) is now growing for gaming.

Smartphone gaming and live gaming getting more popular. Smartphone gaming engagement is increasing among adults, likely in part

2
due to falling user engagement on PC/laptops. Smartphone gaming barriers, such as limited availability of premium games, are also
easing. The viewership for both live or recorded streams of gamers playing and e-sports competitions is growing, mainly driven by young
adults. E-sports is gradually but surely moving closer to being a mainstream sports and operators are also partaking in its growth.

Gaming embraces emerging technologies and platforms. In the media and entertainment space, gaming is at the vanguard of emerging

3
technologies adoption, such as blockchain and extended reality (XR). Blockchain-native games are increasing in number and traditional
studios are also incorporating blockchain technology such as non-fungible tokens (NFTs) into games. The metaverse is also taking shape and
gaming (because of its immersive nature) is expected to be a foundational use case. In order to fully realise the gaming metaverse
opportunity, fit-for-purpose XR headsets/wearables will be crucial.

5G key to support gaming’s evolution. Operator rollouts of 5G networks are continuing apace, creating an infrastructure dividend for

4
gaming. 5G can provide the performance needed to fulfil gaming’s advancing requirements and allow gaming (including multiplayer gaming)
to be reliably done outside the home. 5G-related network innovations such as edge and slicing also help support gaming’s growth. For
operators, providing telecoms infrastructure services to gaming companies is one of four routes to capitalise on the rise of gaming, with the
others being selling third-party gaming services, developing own gaming services and developing e-sports for network and pay-TV benefits.

Bright prospects but challenges along the way. Gaming looks well placed for accelerating growth, with M&A picking up and more non-

5
gaming names such as Netflix offering gaming – all indicators of gaming’s growing opportunity. However, to ensure success, continued
progress will be needed across several areas. This includes gamer engagement, gamer trust and safety, managing emerging tech challenges
(e.g. crypto hacks and interoperability), improving inter- and intra-industry partnerships (e.g partnerships with car manufacturers), and
innovating business models while ensuring full transparency for gamers.
4
 Four market numbers to note
Smartphone gaming engagement
According to the GSMA Intelligence consumer
survey, 42% of adults in 2021 played games on
their smartphones at least once a week.
42% Smartphones are the most popular device for
gaming, with engagement on the rise. Indeed,
consumers consider that the top barriers to
smartphone gaming are easing.
Live gaming viewership
In 2021, 43% of respondents watched live or
recorded streams of gamers playing or watched
e-sports competitions. Live gaming viewership
43% is growing driven, by young adults (those aged
18-24), which is unsurprising given that this
demographic is also the most engaged in
playing digital games.
Gaming subscriptions uptake
Our consumer survey showed that, in 2021,
17% of respondents who played games on any
device had a gaming service subscription
17% (including cloud gaming subscriptions and
console subscriptions). Gaming subscription
uptake is benefiting from various factors such as
the increasing choice of gaming subscriptions.
Household ownership of gaming consoles
Around 25% of households in 2021 owned a
gaming console, according to our consumer
survey. This penetration rate has held up year
25% on year. Consoles are continuing to hold their
own despite building headwinds, such as the
rise of cloud gaming. One reason is that
consoles remain core gamers’ preferred device.
5
1 Executive summary

2 Context

3 Analysis

4 Operator case studies

5 Related reading

6
 Why gaming is becoming the new video
• Gaming’s increasing popularity. Gaming is a popular
pastime for people of all ages. According to GSMA
Intelligence research, 58% of the adult population across
the 10 major countries analysed play digital games at
least once a week. That’s a significant user base. Like
with video viewing, young adults are the most engaged
for gaming (70% of them play games). 5G users,
including those planning to upgrade to 5G, show the
greatest engagement (67% of them play games at least
once a week), confirming that gaming is a key use case
for 5G monetisation.
• Gaming ushers in the age of streaming. Led by big
companies with cloud infrastructure (e.g. Google,
Microsoft and Tencent), cloud gaming has advanced in
the last few years. The shift from traditional gaming on
consoles and PCs to streaming is gradual and mirrors
video’s similar move from physical media/linear to
streaming. As with music and video streaming in the
past, a subscription model is now emerging for gaming.
Though gaming streaming is more complex than video
streaming, device technology and connectivity
infrastructure are advancing and a big proportion of
games can now be supported. The proliferation of cloud
gaming providers augurs well for accelerating tech and
business model innovation in gaming. As growth in the
video market has slowed down, all eyes are on gaming.
Driving forces for gaming
Technology
• Advances in streaming technology and
proliferation of cloud/edge infrastructure.
• Improvements in mobile and fixed networks
in terms of speed, reliability, latency and
coverage – all key capabilities for
enhanced gaming experiences.
• Innovation in gaming platforms and
devices (e.g. smartphones and hybrid
devices). XR devices also on the cusp.
Competition
• The advent of mobile as a leading gaming
platform has opened up the market to new
entrants, including operators.
• M&A is on the rise, reshaping competitive
dynamics and consumer offerings.
• Competitors of all shapes and sizes from
tech giants to operators and games
publishers now offer D2C gaming services.
Customer demands
• Millennials’ on-demand content
consumption habits are driving the
transition to digital entertainment.
• Shift in gaming consumption from consoles
to mobile devices. Smartphones are the
most popular gaming device and
compatible content libraries are expanding.
• Growing interest in digital content bundled
with mobile subscriptions and devices.
Other
• Gaming subscriptions and
microtransactions are on the rise,
supporting gaming economics.
• Adjacent areas to gaming such as e-sports
are becoming mainstream.
• As the video streaming market approaches
saturation, ecosystem focus is shifting to
gaming as a new area of growth.
Source: GSMA Intelligence
7
 Mapping the ecosystem: who is driving momentum?

• Diverse and expanding ecosystem. The gaming ecosystem is diverse and well established. But it is also expanding as gaming embraces
emerging technologies (such as blockchain) and cross-industry developments (such as the metaverse) take shape. Technology giants such as
Google and Microsoft are a key driving force, as they hope to shift gaming from the console/PC to streaming and to transform it, similar to what
Netflix and other video streaming services have done to the video market. Operators are becoming increasingly involved in gaming.

• Emerging technologies push gaming’s frontiers. Ecosystem players involved with emerging technologies such as the metaverse (e.g. Meta),
blockchain (e.g. Solana) and XR (e.g. Nintendo, HTC) are expected to bring new growth to gaming by both attracting new players and increasing
engagement from existing ones, as well as from opening up new revenue streams such as sales of gaming NFTs.

Key categories of players

Game developers E-sports Blockchain

Distributors Device makers Operators Vendors
and publishers organisations companies
• Individual developers • Physical media • Consoles (e.g. • Selling third-party • E-sports teams (e.g. • Computing and • Blockchain
launching their games distributors (e.g. Sony) gaming services Guild Esports) networking developers (e.g.
on app stores (e.g. Game) • XR tech (e.g. HTC) (e.g. AT&T and • E-sports tournament providers (e.g. Ethereum)
Solo Development • Digital download • Smartphones (e.g. Telia) organisers (e.g. ESL GPU/CPU (Nvidia, • Crypto creators (e.g.
Studio) stores such as ASUS) • Developing own Gaming) Intel, Qualcomm) Circle)
• Indie developer firms app stores (e.g. • PCs (e.g. Corsair) gaming services • E-sports distribution and servers (Cisco)) • Blockchain solution
(e.g. Frogwares) Google Play • Hybrid devices (e.g. (e.g. TIM and KT) platforms (e.g. • Cloud providers providers
• Large game studios Store) Nintendo) • Being B2B Twitch) (e.g. IBM, AWS) (Blockchain App
(e.g. Ubisoft and • Cloud gaming • Smart infrastructure • Gaming tech and Factory)
Electronic Arts). platforms (e.g. TVs/boxes/sticks providers (e.g. platform providers
Google Stadia). (e.g. Amazon) Verizon) (e.g. Ubitus, Unreal,
• Developing e-sports Blacknut)
(e.g. Telkomsel)

Source: GSMA Intelligence

8
 Major developments in the last 12 months

• Gaming developments span multiple areas. Key gaming developments in the past year have taken place across various areas, including the
metaverse, more immersive technology, enhanced connectivity (5G), live gaming (e-sports), M&A and new entrants, and regulation.

• Metaverse on the rise. Because of its immersive nature, gaming is expected to be a key use case for the metaverse. Research suggests that
gaming will account for over half of the metaverse’s market value in 2024. Anticipation of this has resulted in a spike in investor interest in firms
capable of building such experiences. Platforms and creation systems that allow users to build, own and monetise (via NFTs) their virtual
gaming experiences may become central to the gaming sector’s role in the metaverse. Also, to fully realise the gaming metaverse opportunity,
fit-for-purpose XR headsets/wearables will be crucial, and product developments from XR device makers (e.g. Apple) will be keenly watched.

• Keep watch of the cloud and e-sports. Cloud gaming’s rise is set to continue, as the biggest traditional gaming names Microsoft and Sony
are firmly behind it (Sony also revamped its cloud gaming offering recently). E-sports is steadily moving closer to the mainstream; its growing
clout is reflected, for example, in the tournament prizes on offer and the size of its (mostly young) fan bases.

Example announcements from the last 12 months

Explainer: Apple Introducing Vodafone Netflix: Let the Niantic Ubisoft Microsoft to Esports:
Why and loses key Meta: A Ziggo: Games Begin: opens up NFTs, acquire Activision Commonwealth
how China is battle in Social New level A New Way to the race to called Blizzard to bring Games trial an
drastically Epic Technology of VR Experience create the 'Digits', the joy and 'opportunity to
limiting Games Company gaming Entertainment next launch for community of show it is more
online fight thanks to on Mobile Pokémon in-game gaming to than just a
gaming for 5G and Go items everyone, across game’
under 18s edge cloud every device

Aug 2021 Sep 2021 Oct 2021 Nov 2021 Nov 2021 Nov 2021 Dec 2021 Jan 2022 Aug 2022

Source: Company announcements and media articles

9
1 Executive summary

2 Context

3 Analysis

4 Operator case studies

5 Related reading

10
 Consumers in focus: assessing behaviour for digital gaming

• Getting insights directly from Gaming consumer insights: survey coverage and key areas of focus
consumers. In our latest
consumer survey (conducted in Countries covered Key areas of focus
Q4 2021), we asked consumers
across 10 major countries a Brazil Frequency of playing games in general and by device type
range of questions about digital
gaming. The survey covered China Type of games played
1,000 consumers in each market. France Interest in gaming content as a value-added service to mobile
subscriptions
• Dynamic dashboard. The Germany
accompanying dashboard Appeal of enhanced gaming experience as a new 5G use case
provides all the relevant data India
Factors impacting smartphone gaming adoption
related to gamers’ behaviour in a Italy
consistent and structured way – a Ownership of digital entertainment devices
valuable asset for companies Japan
looking to formulate or adjust their Ownership of gaming consoles by model, and intent to
commercial strategies and plans South Korea purchase gaming consoles
for gaming. The dashboard UK Subscription to gaming services in general and by type
provides data for 2020 and 2021
(drawn from the respective US Reasons for having a gaming subscription
consumer surveys) for all 10
Reasons for not having a gaming subscription
countries.
Game broadcast or e-sport viewership

Source: GSMA Intelligence Consumers in Focus Survey 2021

11
 Gamer behaviour: three key changes

Smartphone • The proportion of smartphone users playing digital games at least once a week continues to grow, meaning that
gaming smartphone gaming is more popular than ever before among consumers. Engagement with gaming remains highest
among younger adults, but older age groups are showing increased engagement compared to previous years.

• Barriers to smartphone gaming are also easing. Gamers believe that there has been improvement among the top
adverse factors impacting smartphone gaming at scale (e.g. lack of available interesting game titles).

Gaming • Gaming subscriptions are rising in popularity among gamers. This is due to various supporting factors, including a
subscriptions supply-side push from gaming providers. Owning multiple gaming subscriptions is also more prevalent than ever
before (a trend already seen in the video streaming space).

• The top factors influencing subscription decisions remain the same (e.g. value for money), but as momentum builds
behind the subscription model barriers to subscription uptake are increasingly getting addressed.

• Viewership for both live or recorded streams of gamers playing and e-sports competitions is growing. Young adults
Live gaming (aged 18–24) are the main driver behind increased viewership in both cases.

• Numerous factors are supporting the rise in live gaming viewership. For instance, the growth of cloud gaming is
making it easier for casual gamers to access and play popular multiplayer games on which many e-sports
competitions are based.

12
 Smartphone gaming: higher engagement, easing barriers

• Smartphone gaming more popular than ever. Consumers who play games at least once a week, by device type
According to our 2021 consumer survey, 42% of Percentage of respondents. Aggregate figures across the 10 countries analysed.
adults across the 10 countries analysed play games
on their smartphone at least once a week, a figure 58% 58%
marginally higher compared to 2020. The largest 41% 42%
year-on-year variation was on PC/laptop, where 24%
22% 15%15%
gamer engagement fell by 2 pp to 22%. The two 14%15%
3% 3%
variations are connected, as gaming consumption is
increasingly shifting to smartphones. Contrary to Smartphone Tablet PC/laptop Console VR headset Any device
expectations, it was not younger adults who drove
up the overall smartphone gaming engagement but 2020 2021
the 35+ demographic – these consumers are likely
finding more suitable mobile gaming content
compared to in the past. Top five factors impacting smartphone gaming adoption
Percentage of respondents*. Aggregate figures across the 10 countries analysed.
• Key barriers limiting smartphone gaming are
easing. Across the top factors adversely impacting
smartphone gaming adoption at larger scale, there 34% 32% 33% 31%
20% 19% 16% 15% 14% 14%
has been a positive shift in consumer sentiment.
Mitigating factors include more popular console titles
becoming available on mobile, better game Limited screen No interest for Lack of available Excessive mobile Mobile games are
optimisation for mobile screen sizes, screen size size mobile games interesting titles data use not immersive
being less relevant for the game genres that older
2020 2021
adults prefer and the continuing trend towards the
adoption of larger mobile data allowances (including
* Of those who don’t play games on their smartphones on a weekly basis but play on other devices
unlimited data).
Source: GSMA Intelligence Consumers in
Focus Survey 2020 and 2021 13
 Gaming subscriptions on the rise as commercial offerings
increasingly satisfy different needs
• Growth across the board. In 2021, 69% of consumers across Subscriptions to gaming services
the 10 countries analysed played games on any device. Of Percentage of respondents subscribing to a gaming service* (left) and number of
these, 17% had a subscription to gaming services (a 2 pp subscriptions they have (right). Aggregate figures across the 10 countries analysed.
increase from 2020). The US had the largest increase for
gaming subscriptions, up from 13% in 2020 to 22% in 2021. Two or 51%
17% more 46%
Various factors are boosting subscription adoption globally,
including an increasing choice of gaming subscriptions offered 15%
by game providers (including operators), a push by the big 49%
One
console providers (e.g. Sony) for subscription and the 54%
introduction of subscription tiers in popular freemium games. 2021 2020 2021 2020
Cloud gaming subscriptions remained the most popular (e.g
Start by Tencent) followed by console subscriptions (e.g. Xbox
Game Pass) and then game publisher subscriptions (e.g. Top five factors impacting gaming subscription adoption
Ubisoft+). Having multiple gaming subscriptions is becoming Percentage of respondents**. Aggregate figures across the 10 countries analysed.
more prevalent than ever before, across all countries (5 pp
year-on-year increase on average). 35% 33%

• Value for money the top factor when subscribing. Pricing 9% 8% 9% 8% 8% 7% 8% 7%

is the largest barrier to adoption of gaming subscriptions.
However, it should become less of an issue going forward as
Subscriptions are Internet speed Not the best fit Not enough titles Prefer a different
growing competition (and bundles with other services such as
too expensive insufficient for device I play available payment model
mobile subscriptions) increases the range of more affordable on
choices. Indeed, the proportion of gamers who see gaming
2020 2021
subscriptions as too expensive has fallen by 2 pp. Beyond
pricing, availability of gaming titles, good device fit and * Of those who play games on any device
** Of those who play games but do not have gaming subscription services
sufficient internet speeds remain the top subscription barriers –
but these are easing slightly as well. Source: GSMA Intelligence Consumers in
Focus Survey 2020 and 2021 14
 E-sports moves closer to being a mainstream sports

• Live gaming viewership grows. According to our survey, the Share of adults watching live or recorded streams of gamers
percentage of respondents watching live or recorded streams of Percentage of respondents watching gamers via a streaming site at least once a
gamers and the percentage of those watching e-sports competitions week. Aggregate figures across the 10 countries analysed.
increased year on year in 2021 by 1 pp (to 27%) and 2 pp (to 23%),
respectively. Young adults (aged 18–24) were the main driver 50%
44%
behind increased viewership in both cases, with an increase of 27%
26% 22%
around 5 pp in 2021 (for each case). For comparison, viewership 21%
among the 55+ group was unchanged at 11%. The higher interest in
watching live gaming among younger adults is unsurprising given
that they are also the most engaged with playing digital games (70% On any device On mobile device On any device (adults
doing so at least once per week, compared to 58% for all adults). aged 18–24)
Various factors are assisting the rise in live gaming viewership, 2020 2021
including the growth of cloud gaming and support for live gaming
both from traditional media (e.g. broadcasters and pay-TV Share of adults watching e-sports competitions
providers) and new media (e.g. YouTube and Facebook Gaming). Percentage of respondents watching a broadcast e-sports competition via pay TV or
streaming site at least once a week. Aggregate figures across the 10 countries analysed.
• E-sports becoming mainstream. Increasingly, E-sports is being
included in international multi-sports events, recent examples being
the Asian Games and the Commonwealth Games. Its growing clout 38%
33%
is also reflected in the prizes on offer at tournaments (e.g. $40 21% 23%
17% 19%
million prize for Dota 2) and the size of fan bases (e.g. 510 million
social media fans for FaZe Clan). Powered by its young audiences,
e-sports is expected to grow its global revenues by 10% annually On any device On mobile device On any device (adults
between 2022 and 2025 to $1.9 billion, according to Newzoo. aged 18–24)
2020 2021

For more analysis on e-sports, see The growing e-sports business:

Source: GSMA Intelligence Consumers in
operators look for skin in the game Focus Survey 2020 and 2021 15
 Gaming devices: consoles remain key device for core
gamers, while XR devices more hopeful of lift off
• Console maintains its place. According to our survey, ownership of Ownership of gaming consoles by model
gaming consoles among households in 2021 remained unchanged Percentage of households*. Aggregate figures across the 10 countries analysed.
year on year at 25% – despite pressure from the continued rise of
cloud gaming and the increasing popularity of mobile gaming. One 42%
main reason is that consoles remain the preferred gaming device for 30%
core gamers. Console penetration of households is led by console 18% 14% 10% 7%
makers Sony, Nintendo and Microsoft, with the PS4, Switch and
Xbox One being the most-owned consoles. Among households that
PlayStation Nintendo Xbox One PlayStation Xbox Series Xbox Series
own gaming consoles, 54% own a console or consoles from only one
4 Switch 5 X S
of these brands, while a quarter own consoles from two of these
brands or all three.

• Consoles and VR headsets lead paid-for gaming. Around 85% of Gamers who play paid-for games, by device
gamers on consoles and VR headsets pay for titles – which is about Percentage of respondents**. Aggregate figures across the 10 countries analysed.
50% higher than the same figure for all device types (on average).
Console gamers anticipate and intricately research specific titles, 87% 84%
often pre-ordering them for full price. For VR gamers its not individual
purchases but gaming subscriptions that are most popular. 55%
48% 45%
• XR devices look to break out. VR headset ownership continues to
lag, with only 9% of households on average owning one in 2021. This
figure has also remained flat year on year. Developments such as
the rise of the metaverse and Apple imminently launching its XR VR headset Console Tablet PC/laptop Smartphone
headset have rekindled hopes for wider adoption of XR devices for
gaming. But to make this a reality XR gaming content development * Of households that own a console
will also need to keep pace. ** Of those who play games
Source: GSMA Intelligence Consumers in Focus Survey 2021
16
 Metaverse: gaming is an integral part of the emerging
virtual world
• Gaming and the metaverse go hand in hand. Because of its immersive nature, Gaming as a proportion of the metaverse market
gaming is expected to be a foundational use case for the metaverse. Gaming – opportunity
including AR/VR hardware, software, services and ads – is expected to account for Billion
over half of the metaverse’s market value in 2024, according to Bloomberg. Chart Title $800
Various games and gaming platforms today, such as Fortnite and Roblox
respectively, are proto-metaverses, having created all-encompassing virtual worlds $700
where players can engage in a variety of real-world activities such as e-commerce, $650
entertainment and social activities. Given the head start of such gaming
companies, investor interest in them is rising. For example, Sandbox recently
raised $93 million from investors and Microsoft recently purchased gaming studio
Activision Blizzard for $69 billion in part to bolster its metaverse ambitions.

• Gaming will be shaped by the rise of the metaverse. Gaming is likely to be

impacted across various areas by the metaverse, including:
53%
 game content and development (e.g. more user-generated content and 50%
49%
customised experiences; wider XR content development; and faster
development and release cycles)
 business models (e.g. broader use of play-to-earn and create-to-earn
business models) 2022 2023 2024
 e-commerce (e.g. greater crypto/NFT integration for in-game purchases and
functionality to transfer purchased items to other players in games and across Gaming Non-gaming
metaverses becoming the default)
 privacy and security (e.g. more measures such as personal bubbles)
* Market value is rounded to the nearest $50 billion.
 platform (e.g. a shift in platform control when a massively multiplayer online
game runs in another firm’s metaverse, creating implications for monetisation)
Source: Bloomberg
 advertising (e.g. increased and targeted in-game advertising).
17
 5G and associated premium infrastructure key to support
gaming’s evolution
• 5G making inroads, from cloud and XR gaming to e-sports. Digital gaming is 5G adoption worldwide
generally becoming more immersive (e.g. higher-quality graphics), more Number of 5G connections and as a percentage of total mobile
interactive (thus requiring lower latency) and more data intensive. 5G networks connections (excluding IoT)
provide the fast speeds and high-capacity and low-latency capabilities needed to
help fulfil gaming’s advancing requirements and allow gaming (including 5.2 54%
multiplayer gaming) to be reliably done outside the home. Indeed, according to 2.3 26%
our survey, in 2021, for users who both have a gaming subscription and are on 5G 1.0 11%
(or intend to upgrade to 5G), the number of cloud gaming subscriptions adopted
was 2.5× higher per user compared to the remaining non-5G users. The same 2022 2025 2030 2022 2025 2030
group of users is also around 4× more likely to find the enhanced gaming
experience enabled by 5G appealing compared to non-5G users. Both of these 5G connections (billion) 5G adoption
findings reflect in part the appeal of 5G for gaming. In addition, several operators Data correct to Q1 2021
are participating in the Niantic Planet-Scale AR Alliance, which is leveraging 5G to
develop and distribute AR-based games. E-sports teams and tournaments are
also using 5G and premium infrastructure such as edge capabilities (e.g. Verizon Operator adoption of network slicing and edge technology
and Riot Games’ partnership). Where are you in the process of adopting the following technologies?
(Percentage of respondents)
• Network innovation increasingly in play. Edge computing can help where cloud
functionality may be too far away for some gaming applications and locating all
39% 41%
the computing capabilities (e.g. for rendering) in the gaming device would not be 27% 21% 25% 28%
practicable from a real-estate and design perspective. China is a notable example
of edge progress for gaming. Initiatives such as 5G Telco Edge Cloud will also
help support gaming’s progress. Network slicing can be used to customise user Edge Network slicing
uplink/downlink rates and latency requirements to guarantee on demand the level
of service quality needed to support gaming applications. For example, Deutsche Commercial deployment Testing Planning
Telekom successfully completed an end-to-end 5G network slicing trial that
optimised one slice with higher throughput and low latency to support VR gaming. Source: GSMA Intelligence and GSMA Intelligence Operators in Focus:
Network Transformation Survey 2021 18
 Gaming increasingly embraces blockchain technology

• Gaming goes early on blockchain. In the digital media and entertainment space gaming has How much of the gaming industry is likely to
often led the way in adopting new technologies such as VR, and blockchain is no different. leverage blockchain in the next two years?
Digital games using blockchain technology can be either native blockchain games (e.g. Sorare) Percentage of respondents, 2021
or traditional games using blockchain (e.g. Zynga). Native blockchain games broadly fall into
one of three categories: play to collect (e.g. CryptoKitties), play to earn (e.g. Axie Infinity) or
virtual real estate (e.g. Decentraland). Native blockchain games will likely expand as
awareness and acceptance of blockchain-enabled gaming grows. Upcoming additions include 49%
Aurory (based on Solana), Mirandus and The Walking Dead: Empires. Traditional gaming
studios are also incorporating blockchain technology into games. Ubisoft recently launched its
Quartz NFT marketplace in Ghost Recon Breakpoint. The prospect of additional revenues is a 31%
key factor – the NFT market surpassed $41 billion in 2021, according to Chainalysis. E-sports
is also increasingly exploring blockchain technology. For example, the recently held DeFi
Warrior e-sports tournament offered gamers prizes in the form of crypto and NFTs. FirstBlood,
13%
an e-sports platform, has recently onboarded the crypto Dai by MakerDAO, in an example of e-
sports linking with decentralised finance. 6%

• Barriers need addressing. Blockchain gaming can help boost gaming’s growth through
increased player engagement and monetisation, but there are barriers to overcome, including: Only a few Some of the Most of the All of the
gaming industry industry industry
 improving the gameplay experience of blockchain games (e.g. better game mechanics and industry
graphics) players
 better availability of blockchain games on mobile (according to DappRadar, only around
30% of popular blockchain games are available on mobile)
Note: Totals may not add up due to rounding
 improving both game developers’ and players’ knowledge of blockchain technologies
 improving gamer acceptance of play to earn and NFTs
 addressing environmental concerns around blockchain’s use, for example by shifting from
proof-of-work to proof-of-stake chains and applications. Source: Blockchain Gaming Alliance
19
 Competitive dynamics: M&A picks up and Netflix goes from
being emulated to emulating
• Gaming M&A accelerates. There were 584 gaming-related M&A deals during Top 10 gaming M&A investors in H1 2022
2020–2021, more than double the number in 2018–2019, according to Deal value (million)
Refinitiv. Overall deal values are also growing, with $150 billion in gaming Number
deals expected in 2022, an annual increase of 76%, according to investment of deals
bank Drake Star. Gaming deals – such as Microsoft acquiring Activision, Sony
acquiring Bungie or Take-Two Interactive acquiring Zynga – are being driven Microsoft $68,987 3
by a combination of factors, including the desire to develop a strong multi-
Sony $3,600 2
platform gaming presence, prepare for the XR and metaverse opportunity and
build scale for competing in cloud gaming. In cloud gaming, similar to the
Savvy Gaming Group $1,500 2
dynamic in video streaming, exclusive high-profile games are important for
providers to differentiate their services, increasing demand for such gaming
Tencent $530 7
content. However, producing gaming content is more expensive than
producing video content – as such, scale is increasingly important. Embracer Group $301 6
• Netflix enters gaming. Netflix expanded into mobile gaming in November
Team17 $216 3
2021, offering it to subscribers for no extra cost. Netflix sees games as an
extension of its core digital entertainment offering, rather than a new
Nexters $143 3
standalone profit stream (for example, in-app game purchases, a key
monetisation model for games, are not allowed). Netflix sees this as a way to Netflix $76 2
become more relevant in people's lives, given gaming’s popularity. Ultimately,
the goal here is to grow its core business in an increasingly competitive video Animoca Brands $54 4
streaming market. Based on precedent, Netflix’s video streaming peers could
emulate its latest move as well. However, the value is questionable. While Niantic* 3
there is significant room for video streaming services’ existing subscribers to
add gaming, the potential of gaming to attract new video streaming
subscribers is limited, as 88% of adults who subscribe to a gaming service * Deal value data for Niantic is not available.
already have a video streaming subscription, as per our consumer survey. Source: Drake Star
20
 Gaming faces increasing regulatory scrutiny

• Gaming’s impact on children is a growing concern. Globally, regulators are Negative experiences in online games for US gamers
working to find a balance between the value of gaming as an entertainment Percentage of respondents, 2021
activity for children and its probable adverse impacts, such as gaming addiction.
For example, in 2021, China mandated that players under the age of 18 can only
game for an hour on certain days of the week and not at all during the school Harassed at all 83%
week. In the UK, the Children’s Code came into force aiming to safeguard
children when using digital services, with video games a key focus. Called offensive names 71%
• Trust and wellbeing are crucial. According to a recent Anti-Defamation League
report, 83% of adults surveyed had experienced harassment (e.g. racism, sexism Trolling 64%
and bullying) in online multiplayer games such as Valorant and Call of Duty. This
issue could become even more critical as gaming increasingly intertwines with Discriminated against 58%
the metaverse in the future. Governments worldwide are pushing for
safeguarding measures that more broadly cover digital activities. For instance, Physically threatened 52%
the UK is preparing to implement related regulations under its Online Safety Bill.
Gaming firms such as EA and Valve have also launched anti-toxicity initiatives in
Stalked 43%
response.

• Loot boxes under the scanner. Loot boxes are a popular in-game monetisation Sexually harassed 43%
strategy, whereby gamers pay to obtain randomised in-game items. As these
resemble gambling, in that the outcome is chance-based, they are under Doxed 22%
increasing regulatory scrutiny. For example, Spain has recently announced its
intention to regulate these. The UK has asked the gaming industry to take action 20%
Swatted
on loot boxes or face future regulation. Some countries, such as Belgium, have
already banned them. The gaming industry is responding to the concern around
loot boxes through measures such as by allowing gamers to see what is inside
them before purchase (e.g. Fortnite’s X-Ray Llama loot boxes).
Source: Anti-Defamation League
21
 Telecoms operators have different routes to gaming

• Seeking a more direct role. So far, operators have mostly Operator routes to gaming: comparison on selected metrics
benefited from gaming indirectly through upselling, as heavy
gamers need larger mobile data allowances. However, new
thinking is being driven by the shift of gaming consumption from B2C-focused B2B-focused
consoles to mobile devices, combined with the rise of cloud-
Selling Developing Providing B2B Developing
based gaming and technology innovation that heavily involves third-party own gaming infrastructure e-sports for
(or is led by) operators (e.g. cloud, edge and 5G). 5G plays a gaming services (own- and other network and
role for two reasons. First, streaming requires cloud-based services branded) services (e.g. pay-TV
content access, delivery and consumption, which in turn requires (bundled with IT services) to benefits
mobile) gaming
high-speed connectivity and low latencies. Second, our research companies
shows that 5G users are more engaged with gaming than 4G
users and are more interested in having gaming bundled with Time to market Low Medium/high Medium Medium

their mobile connectivity contracts.

• Operators have four possible routes. Operator routes to Gaming Low Medium/high Medium Medium/high
expertise
gaming (see table) are not mutually exclusive – a complete required
gaming strategy may well involve a combination of these options.
As with music and video streaming in the past, a subscription Monetisation Low Medium Medium Medium
model is now emerging for gaming: 17% of gamers already have
a gaming subscription, while 45% of gamers are not interested in
a gaming subscription, leaving a potential incremental market of Notable Post Luxembourg China Mobile Verizon Telkomsel
at least 38% of gamers. To capture this opportunity, a range of examples Telia TIM China Telecom AT&T
SK Telecom Vodafone Deutsche Telekom BT
operators have launched their own local cloud gaming
Telefónica KT China Unicom MTC
propositions, including TIM, Vodafone Italy, Turkcell, China AT&T M1 China Mobile América Móvil
Mobile, Singtel and the three South Korean operators. Operator
engagement in the metaverse is also emerging through
partnerships and developments in technology and content. Source: GSMA Intelligence
22
1 Executive summary

2 Context

3 Analysis

4 Operator case studies

5 Related reading

23
 Operator case study: China Mobile
Tapping into gaming to monetise high consumer engagement
with games and 5G networks
Service
China Mobile launched Migu Kuaiyou, its own-branded B2C cloud gaming service, in June 2019. As per the latest reported figures, the operator had
around 52 million customers for cloud-based games at the end of 2020 (a threefold increase year on year) – most of which were Migu Kuaiyou
subscribers. Migu Kuaiyou has subscription packages available on a monthly basis, starting at RMB10 per month (for reference the average mobile
ARPU was RMB47 per month in China in 2021). However, consumers can also pay to get service access for shorter periods (e.g. for a few hours).

Strategy and objectives

China Mobile’s entry into gaming is part of its wider strategy of developing new growth areas beyond connectivity. Digital content such as video
and games is a key focus, alongside sports and B2B services. GSMA Intelligence research shows that in 2020, among the 16 major operators
analysed, China Mobile had the fourth-largest business beyond connectivity ($14 billion in revenue), after AT&T, Verizon and SoftBank, and had
the highest non-core revenue growth (more than 30% year on year).

Analysis (key findings)

• China is a leading market for gaming. In China, 73% of adults play digital games at least once a week, according to our 2021 consumer
survey – a larger figure compared to the average of the 10 countries analysed (58%). To monetise high consumer engagement in gaming and
the rise of mobile as a leading gaming platform, all three Chinese mobile operators have launched their own cloud gaming services (China
Unicom has Wojia Yunyou and China Telecom has Tianyi Cloud Games), thus stimulating adoption and innovation.
• 5G is a catalyst. Our research indicates that 23% of Chinese consumers who have a gaming subscription are on a 5G network. This suggests
that adoption of gaming subscriptions among 5G users is fairly high, confirming that gaming is a key use case to help drive the migration to 5G.
• Challenges exist. Beyond fierce competition, another challenge for China Mobile and other major gaming providers, such as Tencent and
NetEase, could come from China further tightening its gaming regulations (e.g. stricter rules on the amount of time minors can spend playing
games online).
24
 Operator case study: China Mobile
Contextual data

Analysis (contextual data)

Gamer behaviour in China at a glance Key data points for gaming in China
Percentage of respondents who play games at least once a week,
by device type

Proportion of consumers interested in gaming

66%
Smartphone 44% content as a value-added service to mobile
59% subscriptions

35%
PC/laptop Proportion of consumers who find the
25%
49% enhanced gaming experience appealing as a
29% new 5G use case
Tablet
24%
The top barrier to smartphone gaming for 5G
20% #1
Console users is mobile games not being immersive
14%

76% Proportion of consumers watching a broadcast

Any device
72% 39% e-sports competition via pay TV or a streaming
site at least once a week
5G users Non-5G users

Source: GSMA Intelligence Consumers in Focus Survey 2021

25
 Operator case study: Verizon
Cheerleader for 5G and associated technologies in a growing
gaming market
Service
Verizon is a notable example of operators tapping into gaming through multiple propositions (multi-play approach spanning B2C and B2B). The US
operator provides telecoms infrastructure services to gaming businesses – for example, it has partnered with the NFL to debut a 5G- and MEC-
enabled mobile game for fans in stadia and it is also the official 5G partner for the Valorant Champions Tour e-sports event. It is also involved in
sponsoring e-sports events and teams and has recently teamed up with Microsoft to offer Xbox gaming technology/services as part of its 5G
subscription offerings.

Strategy and objectives

Verizon sees gaming as a key use case for 5G and associated technologies such as MEC. Indeed, gaming is a focus area for the 5G Future
Forum, which was co-founded by Verizon. Its multi-play approach to gaming means that Verizon could move further up the B2B gaming value
chain to a full stack model (providing connectivity, devices, IT services, platforms and analytics), thus becoming an integrated partner for gaming
providers. This is where there is most value for operators.

Analysis (key findings)

• The US had the largest increase in uptake of gaming subscriptions. According to the GSMA Intelligence consumer survey, in 2021, 22% of
US gamers had a gaming service subscription, up 9 pp from 2020 – a larger adoption increase than any of the other nine major countries
analysed. Verizon, AT&T and T-Mobile are looking to monetise high consumer interest in gaming subscriptions, acting as distributors of such
services and forging commercial partnerships with providers of gaming services.
• Assessing the incremental revenue opportunity. Having achieved wide 5G coverage across the country, the three major US operators are
seeking to monetise their 5G networks at larger scale, with gaming a promising use case. Our research indicates that, taking 2020 mobile
revenue as the base, gaming subscriptions could generate up to 3% of new revenues for the US operators in 2025. Given that annual mobile
revenue is set to grow low single-digits during 2022–2025, the gaming opportunity, which comes on top of these figures, can be remarkable.

26
 Operator case study: Verizon
Contextual data

Analysis (contextual data)

Gamer behaviour in the US at a glance Key data points for gaming in the US
Percentage of respondents who play games at least once a week,
by device type

Proportion of those already on 5G or intending to

43%
Smartphone 34% upgrade to 5G interested in gaming content as a
38% value-added service to mobile subscriptions

25%
PC/laptop Proportion of those already on 5G or intending
28%
38% to upgrade to 5G who find enhanced gaming
22% experience appealing as a new 5G use case
Console
22%
Proportion of gamers on any device subscribing to
17% 22%
Tablet a gaming service
18%

62% Proportion of consumers watching a broadcast

Any device
62% 20% e-sports competition via pay TV or a streaming
site at least once a week
2021 2020

Source: GSMA Intelligence Consumers in

Focus Survey 2020 and 2021 27
 Operator case study: Telkomsel (Telkom Indonesia)
A regional e-sports leader and innovator in the wider gaming
space
Service
Telkomsel (Telkom Indonesia), the largest mobile operator in Indonesia by number of mobile connections, has developed a strong gaming presence
in the country through its Dunia Games brand, which it founded in 2013. Dunia Games is the leading e-sports organiser in Indonesia, holding the
Dunia Games Indonesia Playing Time e-sports championship, last attended by 46 professional teams and registering 14 million online views. Dunia
Games also engages in games publishing (e.g. The Return of Condor Heroes), streaming, e-commerce and cloud gaming.

Strategy and objectives

Telkomsel’s long-term transformational goal is to become a leading digital telecoms company. To that end, it has recently launched a new
subsidiary, INDICO, which focuses on growth opportunities in the digital business space across industry verticals, starting with the existing portfolio
covering health, education and gaming. Indeed, Telkomsel’s continued efforts in the gaming vertical are reflected in the various national gaming
awards that it has won.

Analysis (key findings)

• Digital services a driver of growth. Digital services accounted for 11% of Telkomsel’s revenues in 2021, up from 8% in 2019, delivering 28%
year-on-year growth in 2021. Gaming’s individual contribution is not reported, but it’s fair to assume that is on the rise given Telkomsel’s growing
efforts to monetise the gaming opportunity (e.g. recently forming the gaming JV Majamojo).
• Leading telco in e-sports. Telkomsel is among the few operators globally that own an e-sports organisation (most operators involved in e-sports
operate through sponsorships and/or distribution only). In June 2020, it had more than 15 million gamers involved with Dunia Games. Telkomsel is
likely looking to create a strong regional e-sports presence while the e-sports ecosystem is still being developed and the investment required to
break into esports is still relatively small.
• Local games push. Telkomsel is actively supporting local game development through various initiatives such as games publication and game
studio startup support (Indigo program), with a view to increasing gamer engagement akin to video streaming’s push for local language productions.
28
 Operator case study: Telkomsel (Telkom Indonesia)
Contextual data

Analysis (contextual data)

Digital services’ contribution to Telkomsel’s group revenue Number of paying users of Telkomsel’s digital games
services*
Million

11% 27

9% Digital services
8% revenue growth in
2021

28.1% 25

2019 2020 2021 2020 2021

* Includes users of UPOINT (a games voucher e-commerce

service)

Source: Company financial reports

29
1 Executive summary

2 Context

3 Analysis

4 Operator case studies

5 Related reading

30
 Related reading

Operator revenue diversification:

Gaming comes into its own: The growing e-sports business:
growth beyond core
capitalising on shifting consumer operators look for skin in the
continues as
behaviours game
Covid-19 spurs digitisation

Consumer gaming: assessing the Extended reality in media and

Netflix looks to gain from global
new revenue opportunity for entertainment: screening the
expansion and gaming
operators emerging opportunities

31
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