How telcos can get in the game (Reader Forum)

Telcos today are battling shrinking profit margins and plateauing revenue growth. Unfortunately, industry leaders are hesitant to seek new innovations and are in danger of watching emerging revenue channels being claimed from under their noses. This cautious attitude towards emerging trends is causing telcos to lag behind the rapidly changing preferences of today’s consumers.

Although telecommunications providers build expensive and complex networks that enable over-the-top (OTT) services, they see none of the profits. It’s imperative that telcos don’t miss the opportunity to capitalize on the lucrative gaming industry, which by the end of 2025 is estimated to be worth almost $270 billion USD and is on track to be the best application to demonstrate and monetize the 5G telecom infrastructure.

According to PwC, “A successful foray into video gaming would improve the brand positioning of telecom operators and increase the loyalty of their customers. Gaming would increase data usage and produce some boost in revenue. Significantly, gaming would generate more data about customers, which means improved behavioral analytics for a more targeted customer experience and increased monetization.”

It’s time for telecom providers to get in the game to become meaningful players in the gaming value chain. One way to do this is through offering micro-transaction services — a business model where gamers can purchase in-game virtual items for small amounts of money. From experience boosters to cosmetic items and player skins, gamers are eager to customize, personalize and accelerate their progress in their favourite games.

Telcos can bundle value-added services, like microtransactions and mobile data, to attract and retain gamer customers. Not only would this diversify revenue streams, but the mutually beneficial relationships formed between all stakeholders would allow for further cross-selling and up-selling opportunities.

According to Statista, in-game consumer spending accounts for the most significant share of the gaming market. In 2020, global gaming audiences spent approximately $54 billion USD on additional in-game content, with in-game purchases accounting for about 74% of revenue earned across all gaming platforms. In 2025, the market value of in-game purchases is projected to surpass $74.4 billion USD.

To capitalize on this opportunity, telecommunications leaders can and should form partnerships with leading gaming companies to allow their customers access to exclusive releases and in-game perks. These types of partnerships can also allow for direct carrier billing (DCB) or mobile e-wallets for popular titles. With this model, telcos can capitalize on the growing industry by enabling gamers to make in-game purchases by using the telco payment channels instead of credit cards.

Telcos seeking new, unconventional revenue sources to grow and diversify their service portfolios can consider integrating digital payments for gaming subscribers. This is especially relevant for telcos in the Asia-Pacific (APAC) region, which will produce game revenues of $72.2 billion USD, accounting for 47% of the global total. With a year-on-year growth of +11.5%, gamers in Europe, the Middle East and Africa (EMEA) will generate revenues of $34.7 billion USD, representing 23% of the total global games market. Meanwhile, Latin America will make up 4% of the games market, growing +11.1% year-on-year to $5.6 billion USD.

Simplifying payments across the global gaming community, especially for those without traditional bank accounts, is an attractive service for millions of gamers. From creators to distributors and players, value can be brought through seamless access to gaming services. By facilitating the purchase of in-game items and making them easily accessible through diverse payment options, telco subscribers will be better engaged, which will ultimately help to increase the average revenue per user (ARPU).

The use of mobile wallets is also surging, with market size expected to grow at over 20% compound annual growth rate (CAGR) between 2021 and 2027. Due to the rapid global adoption of mobile gaming, mobile transaction volumes crossed $100 billion USD in 2020, with transaction value accounting for about $6 trillion USD.

The popularity of gaming today provides an exciting opportunity for telcos. They can easily tap into this growing global market to diversify business models using their existing capabilities.

To capitalize on the opportunities that the gaming industry presents, telecommunications leaders must take the leap and provide their customers with access to the gaming content and in-game products they’re seeking. By taking a vital role in the gaming value chain, telcos will unlock new revenue streams, capitalize on the growing industry and meet the changing demands of gamers.

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