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5G Network Rollouts | Gamers Willing to Pay More for Better Online Performance

5G Network Rollouts | Gamers Willing to Pay More for Better Online Performance

Posted | Updated by Insights team:
Dr. Evangelo Damigos; PhD | Head of Digital Futures Research Desk
  • 5G
  • Connected Intelligence
  • Sustainable Growth and Tech Trends


Publication | Update: Sep 2020
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A report commissioned by Ribbon Communications claims there exists a $ 150 billion incremental revenue opportunity, per year, in cloud gaming for 5G operators due to the perks of lower network latency, higher throughput, and increased reliability.

An online and email survey of over 5,000 ‘ardent gamers’ in Germany, Japan, South Korea, the UK and the US, carried out by Sapio Research in April and May 2020 discovered 58% of those surveyed already pay a premium to secure the best possible gaming performance, 95% would pay more for an improved experience, and 58% would switch providers if a competitor offered a high-quality gaming service with a new 5G subscription.

Meanwhile, at the University of Kansas School of Nursing, T-Mobile has teamed with students and the KU Center for Design Research (CDR) to apply 5G technologies to nurse education and distance learning initiatives.

“This multi-year program aims to find new and creative ways to educate and train nurses across a variety of settings – whether they are attending a university, conducting research in a lab or working in a rural clinic or large metropolitan hospital,” states a T-Mobile press release

Ed Biller, contributor to RF Globalnet reports that in network rollout news, U.S. satellite TV provider Dish Network has inked its first deal with a traditional telecoms equipment supplier, Nokia, leveraging the latter’s 5G core software. Dish plans to base its network on Open Radio Access Networks (RAN) that use software to run network functions on the cloud, reducing the use of physical equipment, reports Reuters. The provider also has inked deals with “Fujitsu, Nvidia, Altiostar and Mavenir to supply various parts of the network.”

Network rollouts depend on available spectrum. Morris Lore at Light Reading discussed the arbitrary nature of cash-grab 5G spectrum auctions, comparing recent auctions in both the Netherlands and Austria.

“T-Mobile Austria, which has started referring to itself as Magenta Telekom, spent just €86.4 million (2.6 million) on 40MHz in the 700MHz band, a 30MHz license at 1500MHz and another 30MHz of 2100MHz spectrum. T-Mobile Netherlands, its sibling, had to cough up €726 million (2 million) for a stingier 70MHz across the 700MHz, 1400MHz and 2100MHz ranges,” writes Lore. “The licenses are valid over similar periods, too. In the Netherlands, they expire in 2041. In Austria, they will need renewing in 2044.”

Mihoko Matsubara, Chief Cybersecurity Strategist at NTT Corporation, writes on the Lawfare Institute’s blog that Japan has set “a model for global cooperation” in handling its 5G network rollouts — including a cross-vendor approach to infrastructure, tax incentives that “encourage industry to ensure credibility, openness to international standards, security and supply sustainability,” and 5G spectrum that was allocated, rather than auctioned, putting “Japanese telecoms… under less near-term financial pressure to monetize their 5G services than their counterparts in other countries.”

Matsubara notes that, rather than banning some vendors alleging security concerns, “Japan has driven 5G supply-chain risk management by adopting a multivendor approach and fostering international partnerships for innovation and standards-setting.”

Telefónica Germany / O2 is working with Amazon Web Services (AWS) and Ericsson to virtualise its 5G core network, leveraging AWS for cloud infrastructure and relying on Ericsson for 5G core and orchestration components. The operator is starting to implement 5G network functions for selected industry partners this month, with the aim of wider commercial use of the cloud-based 5G core network in 2021.

Other operators are also embracing the digitisation journey and striking partnerships with ecosystem players in the process, particularly for industrial/enterprise use cases. Verizon, for example, launched and expanded its 5G mobile edge compute initiative with AWS and recently completed the first end-to-end, fully virtualised, 5G data session in the US.

Virtualising the network allows for easier and more efficient deployments, bringing benefits in terms of flexibility, cost-saving and faster integration of 5G applications to operators. It also changes the collaborative/competitive dynamics in the mobile ecosystem, as webscalers become increasingly active in the landscape.

Click here to read more (Light Reading)

Click here to read more (Global Newswire)

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Objectives and Study Scope

This study has assimilated knowledge and insight from business and subject-matter experts, and from a broad spectrum of market initiatives. Building on this research, the objectives of this market research report is to provide actionable intelligence on opportunities alongside the market size of various segments, as well as fact-based information on key factors influencing the market- growth drivers, industry-specific challenges and other critical issues in terms of detailed analysis and impact.

The report in its entirety provides a comprehensive overview of the current global condition, as well as notable opportunities and challenges. The analysis reflects market size, latest trends, growth drivers, threats, opportunities, as well as key market segments. The study addresses market dynamics in several geographic segments along with market analysis for the current market environment and future scenario over the forecast period. The report also segments the market into various categories based on the product, end user, application, type, and region.
The report also studies various growth drivers and restraints impacting the  market, plus a comprehensive market and vendor landscape in addition to a SWOT analysis of the key players.  This analysis also examines the competitive landscape within each market. Market factors are assessed by examining barriers to entry and market opportunities. Strategies adopted by key players including recent developments, new product launches, merger and acquisitions, and other insightful updates are provided.

Research Process & Methodology

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We leverage extensive primary research, our contact database, knowledge of companies and industry relationships, patent and academic journal searches, and Institutes and University associate links to frame a strong visibility in the markets and technologies we cover.

We draw on available data sources and methods to profile developments. We use computerised data mining methods and analytical techniques, including cluster and regression modelling, to identify patterns from publicly available online information on enterprise web sites.
Historical, qualitative and quantitative information is obtained principally from confidential and proprietary sources, professional network, annual reports, investor relationship presentations, and expert interviews, about key factors, such as recent trends in industry performance and identify factors underlying those trends - drivers, restraints, opportunities, and challenges influencing the growth of the market, for both, the supply and demand sides.
In addition to our own desk research, various secondary sources, such as Hoovers, Dun & Bradstreet, Bloomberg BusinessWeek, Statista, are referred to identify key players in the industry, supply chain and market size, percentage shares, splits, and breakdowns into segments and subsegments with respect to individual growth trends, prospects, and contribution to the total market.

Research Portfolio Sources:

  • BBC Monitoring

  • BMI Research: Company Reports, Industry Reports, Special Reports, Industry Forecast Scenario

  • CIMB: Company Reports, Daily Market News, Economic Reports, Industry Reports, Strategy Reports, and Yearbooks

  • Dun & Bradstreet: Country Reports, Country Riskline Reports, Economic Indicators 5yr Forecast, and Industry Reports

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  • Euromonitor International: Industry Capsules, Local Company Profiles, Sector Capsules

  • Fitch Ratings: Criteria Reports, Outlook Report, Presale Report, Press Releases, Special Reports, Transition Default Study Report

  • FocusEconomics: Consensus Forecast Country Reports

  • Ken Research: Industry Reports, Regional Industry Reports and Global Industry Reports

  • MarketLine: Company Profiles and Industry Profiles

  • OECD: Economic Outlook, Economic Surveys, Energy Prices and Taxes, Main Economic Indicators, Main Science and Technology Indicators, National Accounts, Quarterly International Trade Statistics

  • Oxford Economics: Global Industry Forecasts, Country Economic Forecasts, Industry Forecast Data, and Monthly Industry Briefings

  • Progressive Digital Media: Industry Snapshots, News, Company Profiles, Energy Business Review

  • Project Syndicate: News Commentary

  • Technavio: Global Market Assessment Reports, Regional Market Assessment Reports, and Market Assessment Country Reports

  • The Economist Intelligence Unit: Country Summaries, Industry Briefings, Industry Reports and Industry Statistics

Global Business Reviews, Research Papers, Commentary & Strategy Reports

  • World Bank

  • World Trade Organization

  • The Financial Times

  • The Wall Street Journal

  • The Wall Street Transcript

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  • Standard & Poor’s Industry Surveys

  • Thomson Research

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  • OneSource Business

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  • Kiplinger Forecasts

  • Dialog PRO

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  • ISI Emerging Markets

  • McKinsey

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M&A and Risk Management | Regulation

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  • ISS Corporate Governance

  • BoardEx

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  • Varonis

  • International Tax and Business Guides

  • CoreCompensation

  • CCH Research Network

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Forecast methodology

The future outlook “forecast” is based on a set of statistical methods such as regression analysis, industry specific drivers as well as analyst evaluations, as well as analysis of the trends that influence economic outcomes and business decision making.
The Global Economic Model is covering the political environment, the macroeconomic environment, market opportunities, policy towards free enterprise and competition, policy towards foreign investment, foreign trade and exchange controls, taxes, financing, the labour market and infrastructure. We aim update our market forecast to include the latest market developments and trends.

Forecasts, Data modelling and indicator normalisation

Review of independent forecasts for the main macroeconomic variables by the following organizations provide a holistic overview of the range of alternative opinions:

  • Cambridge Econometrics (CE)

  • The Centre for Economic and Business Research (CEBR)

  • Experian Economics (EE)

  • Oxford Economics (OE)

As a result, the reported forecasts derive from different forecasters and may not represent the view of any one forecaster over the whole of the forecast period. These projections provide an indication of what is, in our view most likely to happen, not what it will definitely happen.

Short- and medium-term forecasts are based on a “demand-side” forecasting framework, under the assumption that supply adjusts to meet demand either directly through changes in output or through the depletion of inventories.
Long-term projections rely on a supply-side framework, in which output is determined by the availability of labour and capital equipment and the growth in productivity.
Long-term growth prospects, are impacted by factors including the workforce capabilities, the openness of the economy to trade, the legal framework, fiscal policy, the degree of government regulation.

Direct contribution to GDP
The method for calculating the direct contribution of an industry to GDP, is to measure its ‘gross value added’ (GVA); that is, to calculate the difference between the industry’s total pre­tax revenue and its total bought­in costs (costs excluding wages and salaries).

Forecasts of GDP growth: GDP = CN+IN+GS+NEX

GDP growth estimates take into account:

  • Consumption, expressed as a function of income, wealth, prices and interest rates;

  • Investment as a function of the return on capital and changes in capacity utilization; Government spending as a function of intervention initiatives and state of the economy;

  • Net exports as a function of global economic conditions.

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Market Quantification
All relevant markets are quantified utilizing revenue figures for the forecast period. The Compound Annual Growth Rate (CAGR) within each segment is used to measure growth and to extrapolate data when figures are not publicly available.

Revenues

Our market segments reflect major categories and subcategories of the global market, followed by an analysis of statistical data covering national spending and international trade relations and patterns. Market values reflect revenues paid by the final customer / end user to vendors and service providers either directly or through distribution channels, excluding VAT. Local currencies are converted to USD using the yearly average exchange rates of local currencies to the USD for the respective year as provided by the IMF World Economic Outlook Database.

Industry Life Cycle Market Phase

Market phase is determined using factors in the Industry Life Cycle model. The adapted market phase definitions are as follows:

  • Nascent: New market need not yet determined; growth begins increasing toward end of cycle

  • Growth: Growth trajectory picks up; high growth rates

  • Mature: Typically fewer firms than growth phase, as dominant solutions continue to capture the majority of market share and market consolidation occurs, displaying lower growth rates that are typically on par with the general economy

  • Decline: Further market consolidation, rapidly declining growth rates

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The Global Economic Model
The Global Economic Model brings together macroeconomic and sectoral forecasts for quantifying the key relationships.

The model is a hybrid statistical model that uses macroeconomic variables and inter-industry linkages to forecast sectoral output. The model is used to forecast not just output, but prices, wages, employment and investment. The principal variables driving the industry model are the components of final demand, which directly or indirectly determine the demand facing each industry. However, other macroeconomic assumptions — in particular exchange rates, as well as world commodity prices — also enter into the equation, as well as other industry specific factors that have been or are expected to impact.

  • Vector Auto Regression (VAR) statistical models capturing the linear interdependencies among multiple time series, are best used for short-term forecasting, whereby shocks to demand will generate economic cycles that can be influenced by fiscal and monetary policy.

  • Dynamic-Stochastic Equilibrium (DSE) models replicate the behaviour of the economy by analyzing the interaction of economic variables, whereby output is determined by supply side factors, such as investment, demographics, labour participation and productivity.

  • Dynamic Econometric Error Correction (DEEC) modelling combines VAR and DSE models by estimating the speed at which a dependent variable returns to its equilibrium after a shock, as well as assessing the impact of a company, industry, new technology, regulation, or market change. DEEC modelling is best suited for forecasting.

Forecasts of GDP growth per capita based on these factors can then be combined with demographic projections to give forecasts for overall GDP growth.
Wherever possible, publicly available data from official sources are used for the latest available year. Qualitative indicators are normalised (on the basis of: Normalised x = (x - Min(x)) / (Max(x) - Min(x)) where Min(x) and Max(x) are, the lowest and highest values for any given indicator respectively) and then aggregated across categories to enable an overall comparison. The normalised value is then transformed into a positive number on a scale of 0 to 100. The weighting assigned to each indicator can be changed to reflect different assumptions about their relative importance.

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The principal explanatory variable in each industry’s output equation is the Total Demand variable, encompassing exogenous macroeconomic assumptions, consumer spending and investment, and intermediate demand for goods and services by sectors of the economy for use as inputs in the production of their own goods and services.

Elasticities
Elasticity measures the response of one economic variable to a change in another economic variable, whether the good or service is demanded as an input into a final product or whether it is the final product, and provides insight into the proportional impact of different economic actions and policy decisions.
Demand elasticities measure the change in the quantity demanded of a particular good or service as a result of changes to other economic variables, such as its own price, the price of competing or complementary goods and services, income levels, taxes.
Demand elasticities can be influenced by several factors. Each of these factors, along with the specific characteristics of the product, will interact to determine its overall responsiveness of demand to changes in prices and incomes.
The individual characteristics of a good or service will have an impact, but there are also a number of general factors that will typically affect the sensitivity of demand, such as the availability of substitutes, whereby the elasticity is typically higher the greater the number of available substitutes, as consumers can easily switch between different products.
The degree of necessity. Luxury products and habit forming ones, typically have a higher elasticity.
Proportion of the budget consumed by the item. Products that consume a large portion of the consumer’s budget tend to have greater elasticity.
Elasticities tend to be greater over the long run because consumers have more time to adjust their behaviour.
Finally, if the product or service is an input into a final product then the price elasticity will depend on the price elasticity of the final product, its cost share in the production costs, and the availability of substitutes for that good or service.

Prices
Prices are also forecast using an input-output framework. Input costs have two components; labour costs are driven by wages, while intermediate costs are computed as an input-output weighted aggregate of input sectors’ prices. Employment is a function of output and real sectoral wages, that are forecast as a function of whole economy growth in wages. Investment is forecast as a function of output and aggregate level business investment.

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