Online gaming is fuelling network innovation – and a new era for start-ups

Online gaming is fuelling network innovation – and a new era for start-ups

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Gaming publishers are looking for partners that can provide a ‘fast lane’ for gamers to reduce lag. Saad Siddiqui, principal at Telstra Ventures, explains why such requirements are driving technological advancement in infrastructure

One consequence of Covid-19 was a surge in playing games online as people looked to relieve the boredom of being confined indoors. This has awakened a new generation of gamers, which – contrary to the lazy stereotype – encompasses all ages and genders, and people from all walks of life. It is thought that 2.7 billion people worldwide are now playing online games.

It’s big business too. It is estimated that total revenues in the global gaming market (mobile, PC and console) topped $150 billion last year and is on track to surpass $200 billion by 2023. This makes it larger than both the film and music industries.

Game developers and publishers are fighting to deliver unique, fresh gaming experiences to keep their share of thumbs and eyeballs locked onto their game – but they face multiple challenges meeting the expectations of a new generation of customers demanding a flawless gaming experience.

The biggest challenges concern the need for fast, resilient networks and global infrastructure. Consider, for example, lag (or latency): the annoying delay between a player’s move and the game’s reaction. It is often reported as the number-one problem faced in online games, especially those involving multiple players across different continents.

Game developers see the need to solve lag as one of their top priorities. Every second lost to lag can cost them millions in lost revenue – while gamers want to be judged on a level-playing field based on their gaming skills, not the speed of their internet connection or their proximity to a server.

As a result, publishers of globally popular games such as Fortnite, League of Legends and Call of Duty are looking for partners that can provide an ‘upgraded internet’ which could deliver an optimised ‘fast lane’ for gamers that would reduce that annoying lag.

An example in the Telstra Ventures investment portfolio is Subspace, which dramatically improves latency times and local network performance via a globally deployed infrastructure, serving hundreds of millions of gamers. Another example in our portfolio is NS1, which is changing the way infrastructure is deployed and then optimised. It helps companies that want to build their own capabilities and relationships with network providers to improve game performance.

Networks are, of course, evolving all the time. On the mobile side, 5G is now live in more than 60 markets worldwide and is on track to account for about a fifth of global mobile connections by 2025.

This rollout of state-of-the-art networks – alongside the increasing adoption of gaming devices (such as headsets) – is contributing to better gaming experiences. However, the conversation is already shifting to what ‘6G’ might look like and how it will be delivered. For example, another of our portfolio companies, Cohere, is today working with mobile operators to increase spectral efficiency by mathematically mapping mobile networks – which will be part of the emerging 6G conversation. This approach does to the network what Google did to the internet: make the internet searchable by mapping a mathematical model onto the location of all of the information on the web.

This is just one example of how the requirements of online gaming is driving technological advancement on the infrastructure side.

In fact, gaming’s influence reaches much further. We are seeing plenty of innovations developed in the gaming industry – in areas such as user acquisition and user engagement – replicated across many different sectors, including retail and financial services. This is driving the ‘gamification’ of many industries.

Gaming can also be considered a ‘new social media’. Instead of spending time on Facebook, Snapchat, or Twitter, which people still do but skewed toward older demographics, consumers are increasingly connecting with each other via the online games they’re playing.

As a VC, Telstra Ventures is seeing the investment potential of a new era of start-ups focused on gaming infrastructure such as network tech, AI/ML, security, and payments. 

But we’re also seeing innovative start-ups across many vertical sectors – from personal finance to online fitness – that are adopting gaming techniques and approaches. 

Gaming is truly eating the world!



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