Global Wireless Infrastructure Revenue Increased by 20%

In 2020, telecom companies became heroes of a pandemic-fueled scramble to work remotely. The telcos provided much-needed infrastructure for the massive — and unanticipated — business and cultural shift. Carriers kept many businesses running, communities functioning, and the game industry thriving during chaotic times.

Since then, cellular subscriptions worldwide have multiplied, and smartphone adoption has exploded. From 2020 to 2022, global wireless infrastructure revenue increased by 20% (from $41.4 to $49.8 billion), and mobile operators’ global revenue hit $1.07 trillion in 2022, with a forecast of $1.2 trillion by 2030. 

The surge of hyper-fast, lag-free connections was a boon for video game companies as streaming entertainment and online gaming took off. Telecom is not slowing down. (Source: Statista)

The video game industry is experiencing phenomenal growth, leaving more stagnant markets in the dust. This surge has transformed gaming into one of the world's largest entertainment sectors, attracting major players from technology and social media and eclipsing the more traditional industries’ revenue. 

Many business titans — from entertainment to telecom — are diving in to capitalize on the gaming's immense revenue potential.

Telcos + gaming: A strategic alliance

Yes, the gaming industry is on fire, but it's a double-edged sword for telecoms. Despite surging video game demand, a telecom clients' survey revealed a 22% post-pandemic decrease in customer loyalty and revenue growth. (Source: TechSee)

While some operators are stuck in neutral, watching profits shrink as nimbler ones swoop in on their audience, others are waking up and looking for new markets to fuel global growth — spotting a golden opportunity in mobile gaming. 

Tech-savvy, loyal gamers represent a massive spending pool. Their data usage patterns allow telcos to regain a foothold in the entertainment space – a territory once dominated by companies like Apple, Spotify, Netflix, and Google.

Telecoms paired with gaming businesses is a logical collaboration. Telcos possess the infrastructure, an extensive user base, and services that complement the gaming industry. By embracing gaming, telcos can expand their revenue streams, enhance their brand image, and attract a valuable demographic of young, tech-savvy gamers.

The partnership potential goes well beyond just adding popular mobile games to a carrier's portfolio of offerings. Telcos can leverage their strengths to become key players in the gaming ecosystem. The global video games market shows strong yearly performance, generating more money than both major entertainment industries combined. 

In 2023, the music market generated $28.3 billion, surpassed by the film industry’s value of $77 billion. In stark contrast, the gaming market boasted a staggering revenue of $228 billion and will grow at 7.21% annually to $323 billion by 2027. 

Additional data further underscores mobile gaming’s dominance, which captured a commanding 49% share of the global games market in 2023 — in stark contrast to the market share held by console and PC games, which lagged at 29% and 22%, respectively. (Source: Newzoo)

Integrating exclusive video game services and products within a telco's marketplace allows operators to enable direct carrier billing (DCB) and mobile wallets to make paying for gaming perks more convenient. 

Finally, mobile gamers use a lot of data, which telcos can use to carve out their game industry niche. Statista reports that in 2020, a whopping 74% of total gaming revenue came from players dropping $54 billion on extra content. Analysts predict this trend will continue, with the in-game purchase market projected to hit $74.4 billion by 2025. 

What does this mean for the game industry?

While 4G remains the dominant force (accounting for 60% of mobile connections in 2022), 5G's rapid rollout is notable. By 2021, 5G has already secured a 12% market share, and projections suggest 5G will surpass 4G as the leading technology by 2030, reaching over half of global connections. 

Telcos strategically partnering with game developers to provide subscribers exclusive content and in-game benefits has several advantages for the game industry:

• Mobile game companies seeking expanded reach can leverage telcos’ infrastructure and subscriber base.
• The industry pairing aligns perfectly with the booming 5G trend, as high-speed networks are crucial for game developers — enabling cloud gaming, VR, and the metaverse. Telcos can become key players in the evolving gaming landscape.
• The convergence of 5G and mobile gaming within a telco's network creates a valuable data stream. Player shopping behavior within these games, including in-game purchases, provides crucial customer insights. 
• Developers can leverage the data from gameplay patterns to unlock player insights, drive ongoing player engagement, foster loyalty, and reduce churn.

Two prominent case studies further highlight the successful collaboration between video game businesses and telecom companies:

• Tencent and China Unicom created a joint venture focused on content distribution networks (CDN) and edge computing capabilities, offering telecom gaming data packages and exclusive in-game perks.
• Supercell partnered with Deutsche Telekom, among others, to offer special gaming packages.

By pairing strengths, the telecom + gaming industry collaboration takes a gamer-centric approach that benefits both industries. Carriers have a wide window of opportunity to leverage their existing capabilities, tap into an exploding video game market, and successfully diversify their business for more revenue and higher profit margins.

Conversely, mobile game developers can expand their global customer reach by distributing games to third-party marketplaces, platforms, and ecosystems such as super-apps, bank apps, ISP carriers, web portals, and telecommunication platforms.