Sharing a big pie: Should telecom operators branch out into mobile gaming?

The mobile gaming market has grown into one of the most lucrative entertainment sectors globally, generating billions in annual revenue. In 2023 alone, the global mobile gaming market reached $116 billion, and forecasts predict this number will soar past $160 billion by 2026. With a projected Compound Annual Growth Rate (CAGR) of 8.7%, mobile gaming continues outperforming other entertainment sectors like film or television, creating significant opportunities for companies looking to diversify their revenue streams. One sector with untapped potential in mobile gaming is telecom operators.

The Marketing Dilemma: High User Acquisition Costs

One of the biggest challenges in mobile gaming is the high user acquisition cost (UAC). To put things into perspective, top-tier mobile games like Candy Crush Saga and AFK Arena spend tens of millions annually on marketing, often eclipsing their development and maintenance costs. For instance, many successful games allocate upwards of $50-$150 million annually to marketing and user acquisition, with costs per install (CPI) ranging from $2 to $3. For most developers, these steep marketing expenses present a significant barrier to entry, often dwarfing production costs.

However, telecom operators are uniquely positioned to bypass this hurdle.

A Competitive Edge: Millions of Subscribers at Your Fingertips

Telecom operators already have a significant advantage in the mobile gaming space: a massive, built-in subscriber base. This is where they can flip the script on the traditional mobile gaming business model. Instead of pouring millions into user acquisition, operators can tap into their existing customer base, offering exclusive access to games through direct marketing and pre-installed apps.

For example, telecom giants like Verizon have already taken steps into mobile gaming. Verizon launched its own Verizon Games platform, which offers exclusive titles and gaming bundles for its subscribers. Additionally, NTT Docomo and SK Telecom have been experimenting with cloud gaming services, offering mobile games that leverage 5G technology. These efforts demonstrate that operators are beginning to recognize the potential of leveraging their networks to engage mobile gamers.

The Catch: Mobile Gamers Demand a Different Approach

While telecom operators have a clear competitive advantage, there is still a catch: mobile gaming is a different beast compared to traditional telecom services. Gamers expect constant updates, fresh content, and engaging experiences, requiring operators to adapt their approach. Offering exclusive titles or hosting unique in-game events tied to their services can help keep subscribers engaged. However, acquiring and retaining gamers will require understanding gaming trends and user preferences and building strong community engagement.

Telecom giants must remember that plyers are not mere consumers but active participants in a game’s ecosystem. Creating loyalty programs, offering in-game rewards, or partnering with popular game developers for exclusivity can significantly boost engagement.

The Lucrative Investment: Experiment and Grow

The potential rewards for TSPs willing to plunge into mobile gaming are vast. While gaming may not have been part of their core strategy in the past, the growth of this sector suggests it’s time to start experimenting with modest development investments. By launching small-scale mobile games and leveraging their giant subscriber base for feedback, telecom operators can explore the viability of this market with minimal risk.

The gaming industry’s low development costs compared to traditional telecom investments like infrastructure upgrades or IoT make it a low-risk venture with the potential for high returns. With their reach, telecom operators can reduce the high marketing costs that typically hamper game publishers, enabling them to focus more on building a compelling user experience.

Interested in learning more? Let’s discuss how we can help your company venture into the booming mobile gaming industry. Contact us for a free consultation!