Today, many telcos are plagued by shrinking margins and stagnating revenue growth. Industry leaders aren’t aggressively seeking new innovations and instead are in danger of passively watching as large and vital emerging revenue channels are claimed from under their noses. As Vijai Karthigesu, CEO of Swarmio Media says, a reluctance to take advantage of emerging trends and a cautious “wait and see” attitude is causing telcos to fall out of touch with what consumers seek from modern internet providers.
Although telecom providers build the expensive and complex networks that enable most over-the-top (OTT) services, they see none of the profits. It’s imperative that telcos don’t miss the opportunity to capitalise on the lucrative gaming industry, which, by the end of 2025, is estimated to be worth almost $270 billion (€247.44 billion) USD and is on track to be the best application to demonstrate and monetise the 5G telecom infrastructure.
Customer loyalty
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 monetisation.”
Like a traditional sports game, the video game value chain involves many different players with whom operators need to understand and form working relationships. If telcos are able to write a “playbook”, then they can define their own ways to play with their own unique ways to win in this growing market.
Typical players within the value chain include developers, publishers, distributors, retailers and device manufacturers. Within the realm of esports, players can consist of teams and leagues, event organisers, distributors, gaming platforms, and even advertisers. On top of these core stakeholders, ancillary services such as conventions, stadiums for tournaments, and community interactions through gaming cafes and social media play a significant role in engaging fans. There are numerous ways for telcos to play and just as many ways to win with these stakeholders in the game.
It’s time for all telecom providers to get off the bench and join the game to become meaningful players in the value chain. One way to do this is by offering microtransaction services to gamers. A microtransaction is 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 customise, personalise, and accelerate their progress in their favourite games.
Value-added service bundles
In addition to regular offerings, telcos can bundle value-added services and content to attract and retain customers. Not only does this service allow telcos to diversify their revenue streams, but the mutually beneficial relationships formed between all stakeholders (including both telcos and game publishers) allow for further cross-selling and up-selling opportunities.
For game publishers, partnering with telcos to bundle services can present many innovative advantages. These can include helping publishers break into new markets, providing an immediate boost to the distribution of a new title, supporting marketing efforts, and even adding hundreds of new paid users almost instantly. Even for mobile carriers, this agreement helps retain users and improve the average revenue per user (ARPU).
According to Statista, in-game consumer spending accounts for the biggest share of the gaming market. In 2020, global gaming audiences spent approximately US$54 billion (€49.49 billion) on additional in-game content, with in-game purchases accounting for approximately 74% of revenue earned across all gaming platforms. In 2025, the market value of in-game purchases is projected to surpass $74.4 billion (€68.18 billion).
To capitalise 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) for popular titles. With this model, telcos can capitalise on the growing industry by allowing gamers to make in-game purchases by charging payments to monthly phone bills.
The ability to monetise these digital cosmetics will open up increased avenues for revenue generation, which can benefit all parties involved. For example, publishers can negotiate that they receive a small percentage of each transaction, and consumers can sell unwanted items to other players.
According to a new Juniper Research study, experts predict that end user spend via carrier billing will increase to $73.8 billion (€67.63 billion) in 2024, from $54.4 billion (€49.85 billion) in 2021, with growth driven by 5G-based mobile gaming and video subscriptions.
Unconventional revenue lines
Telcos who are seeking new, unconventional sources of revenue and business models to grow and diversify their service portfolios can look to integrate 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 (€66.17 billion), 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) region will generate revenues of $34.7 billion (€31.80 billion), 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 (€5.13 billion).
Simplifying payments across the entire gaming community, especially for those without traditional bank accounts, is an attractive feature for millions of gamers globally. From creators to distributors and players, value can be brought to each stakeholder through access to gaming services. By facilitating the purchase of in-game items and making them easily accessible to gamers through diverse payment options, telco subscribers will be better engaged, which will ultimately help to increase ARPU. There is an opportunity for telcos to deliver engaged, paying audiences top-notch payment flows and rates for all creators and developers involved.
Mobile wallets
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. The global mobile transaction volume crossed $100 billion (€91.64 billion) USD in 2020, with transaction value accounting for about $6 trillion (€5.50 trillion). This growth is primarily driven by the rapid global adoption of mobile gaming.
The popularity of the gaming industry today is an exciting opportunity for telecom operators. They can easily tap into this rapidly growing global market and diversify their business using their existing capabilities.
To capitalise on the opportunities gaming presents, telecommunications leaders must now take the leap and become the portal that provides their customers with access to the gaming content and in-game products they’re seeking. By taking a leadership role in gaming content provision, telcos can unlock critical new revenue streams, capitalise on this growing industry, and meet the changing needs of gamers.
Learn how Swarmio Media is powering the gaming and esports ecosystem.
The author is Vijai Karthigesu, CEO of Swarmio Media.
About the author
Vijai Karthigesu is a serial entrepreneur, innovator, and a thought leader in the fields of software-defined networking and decentralised computing technologies with 20+ years of industry experience.
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