A $6.9 billion revenue opportunity
Verizon (VZ) is quietly developing a cloud gaming service, and trials have already begun, the Verge reported. Verizon’s gaming app is initially available on the Nvidia Shield set-top box but should eventually reach Android devices, the report stated.
The global cloud gaming market was valued at $802 million in 2017 and is forecast to grow to $6.9 billion by 2026, indicating an attractive new revenue opportunity for Verizon. Currently, Verizon relies on selling mobile services for the majority of its revenue, so getting into cloud gaming would mean a new revenue source for the company.
Pursuit of cloud gaming revenues
In addition to Verizon, Microsoft (MSFT), Google (GOOGL), and Amazon (AMZN) are other companies pursuing the revenue opportunity in the cloud gaming market. Microsoft and Google are chasing cloud gaming dollars through Project xCloud and Project Stream, respectively. For its part, Amazon could launch its cloud gaming service as soon as 2020, the Information reported.
Capitalizing on 5G connectivity
Creating a cloud gaming app is viewed as Verizon attempting to take advantage of the arrival of 5G connectivity to expand and diversify its business. 5G delivers ultrafast connect speeds on wireless networks and is expected to greatly expand the addressable market for wireless operators. Verizon and AT&T (T) began offering 5G services in select markets in the United States, and they are expected to expand the rollout this year when 5G-compatible smartphones are expected to reach the consumer market. According to a study by Ericsson, interest in 5G connectivity is so strong that there may be as many as 1.5 billion 5G subscribers by the end of 2024.