Why GCC telecom operators should be looking at gaming

Video gaming offers a major opportunity for telecom operators to diversify their business. A move into gaming could boost their brand positioning and increase customer loyalty. It would also generate invaluable data about these customers. Operators should start their venture into gaming with short-term, realistic goals, and then expand steadily from a solid base.

The opportunity is mouth-watering. The gaming industry has grown tremendously in recent years. It is now worth $129bn a year, larger than the revenue of worldwide box office, music streaming and album sales, and major sports leagues all put together. There are close to 2.5 billion gamers worldwide.

The GCC gaming market has followed the rapid expansion. Global games devised by international developers have so far dominated this regional market. However, the continuing demand for local content creates an opportunity for global players, who can adapt their content, and for local players, who can refine global content themselves.

There has also been substantial growth in eSports events and competitions in the region. eSports are now an established spectator sport. New venues such as Challenge Arena Lounge and Clix Gaming Lounge in Saudi Arabia, and the planned Dubai-X Stadium in the UAE, have organised several competitions. The success of local players, such as Mossad Aldossary (known online as Msdossary), has further fueled popular interest.

Faced by flat or falling revenue and intensifying competition, diversifying into video gaming promises major benefits for operators. The first benefit relates to brand positioning. Being associated with video gaming would encourage customers to view operators as providers of exciting gaming experiences.

Given that more than half the GCC population is under 25, the change in perception is important. It could make young customers more receptive to the operator’s general offerings and increase loyalty at a time when traditional telecom services are becoming increasingly commoditized.

The second benefit is that operators can gain more knowledge about their customers. More engagement with gaming offerings boosts the availability of customer data, enabling operators to target customers with specific products and services, and provide an improved customer experience.

The challenges ahead of operators are similar to those that experienced gamers face. Stay on the same path, and eventually it is game over. Make rash decision, a leap into the unknown, and the result could be just as bad. There is an alternative, however. A wily gamer knows when to explore a new path. Video gaming represents precisely that alternative approach for telecom operators.

There are several ways in which telecom operators can exploit the gaming market. Providing enhanced connectivity through infrastructure is the simplest and least ambitious approach. Operators can supply data packages that offer better quality of service for gamers. This could be bundled with gaming hardware and content and subscriptions to online platforms.

The next stage would involve creating partnerships with leading gaming companies, giving customers access to exclusive game releases or introducing in-game advertisements for the operator’s own products. Such partnerships would also facilitate direct carrier billing for popular games, with users able to carry out in-game purchases through charging payments to their phone bill.

A more ambitious play would see operators forming close partnerships with developers, with the intention of making gaming content more relevant for local subscribers. This might mean translating games into Arabic, or amending images and the background story to suit regional culture. As some top games are not currently allowed in some markets, this could be a particularly beneficial approach for operators. When the operator gains confidence and feels ready to take on the major players, it can even contemplate developing its own games and products.

Another option is to venture outside the core of the video gaming industry by entering eSports. With this approach, the operator will need to undertake substantial investment by setting up its own events and building its own eSports teams to compete internationally. Such a bold move would strongly associate the operator’s brand with the gaming ecosystem as a whole.

Operators can make use of various business models for these approaches. Rather than forming partnerships with a particular gaming company, operators could instead choose to invest in, or even acquire, such a company and thereby gain access to its subscribers. They could also form partnerships with other telecom operators to benefit from each other’s capabilities and assets.

Indeed, the ability to select the right partners will be crucial. As they become more immersed in gaming, operators will need other capabilities too. For example, they will have to recruit top gaming talent, including specialist marketing and customer support teams. Where necessary, they will have to augment technology requirements, such as server capabilities, for particular gaming initiatives. They will need excellent market research capabilities in order to gauge whether their planned approach to the gaming industry will work for them.

Like gaming itself, this exciting opportunity for GCC telecom operators demands skill, patience and astute strategy.

Hicham Fadel, Jad El Mir and Johnny Yaacoub work with Strategy& Middle East, part of the PwC network