Video Game Market Will Be Biggest Winner in 5G’s First Years, PwC Says

The technology has already catalyzed the gaming industry

5G will push advertisers to create more immersive, personalized experiences.
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A new media industry report from PwC names video games as perhaps the most promising digital consumer revenue stream to reap gains from next-generation wireless speeds in the first half-decade after 5G deployment.

Although the report’s authors expect the boost in network speed and capacity to eventually transform every level of the digital media industry, they say the immediate impact it’s expected to have on cloud gaming is already spurring big investments, including from the likes of Google and Microsoft. For marketers, that may mean more opportunities for game-centric advertising, in the form of esports sponsorships, native interactive content or in-game product placements.

“One [in-home 5G use case] that we’re probably most excited about right now is cloud-based gaming, which also has an advertising component to it potentially,” said Dan Hays, a PwC principal focused on media and telecoms. “Cloud-based gaming has been something that’s been talked about for many years, but most homes have lacked the bandwidth to really support it, especially for the more graphically intensive games.”

The report’s release comes the day after Google announced it would reveal more details about its cloud gaming service Stadia this week, joining companies like Microsoft and Nvidia in the crowded race to own a piece of the budding market. Meanwhile, brands are also beginning to pour more money into the medium; Emarketer projects in-game ad spend to reach $3.25 billion this year, an 18% jump from last year.

PwC also sees augmented reality as an important feature for 5G-enhanced media beyond gaming, especially for the retail industry. While consumer interest in virtual reality remains somewhat tepid, the report predicts the medium could finally have its moment once 5G usage hits a critical mass in the mid-2020s.

Immersive media experiences like those could require a new creative approach from advertisers, one that’s geared for interactivity and hyperpersonalization, Hays said.

“Some of it comes down to very location-centric, context-aware types of engagement models,” Hays said. “Is [the target consumer] a man or a woman? Do they have children? How old are they? For marketers and advertisers that may not have experience in creating these very personalized interactive experiences, that’s going to be a new skillset.”

PwC partner CJ Bangah compared the shift in creative 5G to the advent of other transformative media, like television and digital.

“If you think back a hundred years on ads and how fundamentally basic [ads] were, you went for volume; you had no choice. Then came TV ads, where you could start segmenting your audiences, and you can start knowing, hey, most people that watching this TV show are watching it with their family during these hours,” Bangah said. “The opportunity with 5G to really disrupt and evolve the industry so that ads don’t have to be disruptive and can be so much more experiential is really one of the bigger opportunities.”

But the continued persistence of traditional media, like terrestrial television—even in the face of digital disruption that industry-watchers long ago predicted would make them obsolete—could also slow this shift, according to Bangah.

“If you think about not all players in the ecosystem being prepared to effectively operate in a digital-first world and not being fully caught up to the types of experiences consumers really want and find differentiated and delightful … and you look at 5G, there’s the risk that some organizations fall further behind,” she said.

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