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A game changer for gaming

5G will transform industry by giving streaming services a chance to become big competitors

| Japan
Hirokazu Hamamura, president of Gzbrain.
Hirokazu Hamamura, head of Famitsu Group, speaks to the Nikkei Asian Review in Tokyo on Dec. 19. (Photo by Manami Yamada)

The year 2019 is expected to see the start of the 5G era with global companies planning to roll out new products using next-generation wireless networks that will enable broadband-like speeds for smartphones.

This development will drastically affect the electronic gaming industry.

It could, for example, boost the popularity of virtual reality games. If we can hook up a VR console to 5G networks, we could watch a live concert or a baseball game, as if we were there, which would be useful especially for people living in remote areas.

I think it will happen soon. VR headsets still have a way to go and improvements are necessary, such as making them smaller, lighter and less nausea-inducing, but the speed of progress has been astonishing and we will see more advances in 2019.

Cloud gaming will also likely experience the impact of 5G.

Cloud gaming is when gamers, using cloud technology, are able to play a game by streaming instead of having to download, so they remain constantly online. With 5G, the internet will become faster and there will be fewer delays, giving it the potential to reshape various kinds of game software.

As a result, companies like Netflix or Hulu, which offer streaming services, could become potential competitors in the gaming industry.

New entrants have come into the market before in Japan. Companies such as Yahoo Japan, online retailer Rakuten, and chat app operator Line have all started game businesses. What they had in common was that they already had a platform used by a lot of consumers.

With a platform that is already gathering people and creating a community, launching games is among the easiest and quickest ways to make more money.

Nowadays, it is not only important for games to be fun and interesting, but also to have the capacity to garner many people in order to be popular and successful. I mean, let's say you ask online for a partner to go on a journey in a game but do not hear back from anybody in an hour, you would not want to play that game. Would you?

Although streaming services companies may not have the know-how to create games, they have every chance of recruiting top engineers from gaming companies. They can even buy talent through acquiring smaller game companies.

Companies and organizations involved in esports, the business of professional gaming, worked hard in 2018 to raise its profile -- and succeeded. It was most helpful that esports was featured as a demonstration sport at the Asian Games in Indonesia, where the Japanese team took home the gold medal.

Going forward, I believe esports will enter the next stage of development in Japan, with regional cities competing to host events. As well as featuring pro players, organizers should encourage normal people to participate.

Esports events could even be deployed to help revitalize recession-hit districts. A town with a deserted shopping street could establish an esports team studio. Fans could visit and perhaps meat their favorite stars, such as the popular idol team AKB48.

In terms of esports' commercial development, Japan is still lagging behind other countries such as South Korea where the prize money is higher, players receive sponsorship, and teams are organized with nutritionists and players' gyms.

Asia accounts for an overwhelming share of the global game market; almost double the market size of Europe or the U.S. The main driver is China's mobile game boom. 

China's game development capabilities are improving drastically and are close to top class. With a huge population and a growing mobile gaming industry, companies still consider it an attractive market.

However, China is still a difficult market for foreign gaming companies. Joining hands with locals like Tencent Holdings is pretty much the only way to go because independently, it is very hard to establish a presence.

I hear that developing games suitable for China is also boosting development costs. China's consumers spend a lot of money, for example to buy items within a game, but they tend to move to a new game rather soon. Game companies therefore must keep updating and releasing new content to keep customers happy.

Meanwhile, the development of games based on 5G streaming, will increase the competition for the traditional console-based home video game companies including Sony and Nintendo.

But let's not write them off too soon. In the past few years, they saw growth slow following the emergence of games played on mobile smartphones. However, they fought back with new products including Sony's PlayStation 4 and Nintendo's Swith which spread globally.

Now, Microsoft has announced a plan to roll out Project xCloud, which is a new streaming service for video games. It aims to allow gamers to play high quality video games on different devices, meaning mobile only players won't need to purchase expensive consoles while PC players can choose which device to use depending on where they are. 

Meanwhile, Epic Games has announced plans to roll out a new gaming distribution platform called "Epic Games Store" that will create a place for its own games and for integrating third party titles.

Such developments open the market to new ideas. Just as Apple unexpectedly dented the dominance of Nintendo and Sony, new rivals will emerge. Gamers could play games on their consoles and PCs at home while using smartphones or tablets to play the same content outside the house. This could change the way games are offered and how we think about platforms. This is a huge revolution.

Hirokazu Hamamura is head of Famitsu Group, publisher of magazines focused on video games. Interviewed by Nikkei staff writer Jada Nagumo.

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