The enterprise video conferencing market is your new billion-dollar tech industry. Depending on who you trust to predict the financial future, the reward for putting businesses in face-to-face contact with each other and their clients is going to be worth a lot.
Depending on what prediction you look at, it could reach a market value of $7.9 billion by 2023, $8.9 billion by 2025, or $10.5 billion by 2026. That’s big business no matter who ends up being right. All of the Big 5 tech companies are on board to some degree, new innovations are released every year, and it has been estimated that 86% of U.S. businesses will use video conferencing to communicate this year.
As with any industry, though, the question remains whether all that money will lead to innovation or whether we’ll just see the same household names when we make a video call.
The Video Conferencing Industry Continues to Grow
The video conferencing market is not only growing in value, it’s expanding in size. Since the turn of the decade, video startups have raised more than $1 billion across 79 deals. The year-on-year figures are growing as well. In 2010, less than $60 million of capital was invested in new ventures, in 2015 over $150 million was raised, and in 2017 the amount of money invested in new video conferencing startups was more than $240 million.
The rapid advance of related internet technologies has given many new companies a unique wrinkle to exploit. We’ve seen Appear.in take advantage of browser-based WebRTC software that lets users make calls without having to establish an account. Airtime and Rabbit have introduced third-party media streaming to group video calls. The arms race among the social messaging services has seen them branch out into video calling. There’s even a new breed of video conferencing coming that uses blockchain technology.
Finally, the rise of Slack has forced a rush to include video conferencing in workplace collaboration apps, which has seen established companies like Microsoft and Facebook reconsider their main video offerings.
In short, there’s no longer a single “Skype” out there to dominate the video field. Some industry experts, however, think the big expansion is about to be met by a big crunch.
Consolidation Is Coming to the Enterprise Video Conferencing Market
All the Big 5 tech companies have made changes to their video calling products over the past couple of years. Amazon joined the enterprise battle with the launch of Chime, Apple recently overhauled FaceTime, and Facebook has entered the business market with Workplace by Facebook. Google and Microsoft have long been key players with their respective Hangouts and Skype brands.
These are serious companies with no track record for playing nice with the competition. The video newcomers attracting that billion-dollar investment we talked about above will have a real struggle to survive.
According to Vice President and General Manager of Logitech Video Collaboration Scott Wharton, we could see the start of a video market consolidation sooner rather than later. Wharton told VC Daily we should expect multiple vendors to be acquired by bigger fish, move into niche areas, or simply go bankrupt.
Which begs the question: With all this money pouring into the market, can a newcomer survive and thrive the way Google once did?
Is Zoom a Real Threat to the Big 5?
There is at least one person who has thrived in the video calling market despite the presence of the Big 5. Eric Yuan founded and then sold video conferencing platform WebEx before going on to found another enterprise video leader, Zoom. That second company is now valued at $1 billion and enjoyed a recent run as the fastest growing app in the world. Yuan’s rise came at a time when the Big 5 were largely asleep at the video conferencing wheel, but his model of providing cheap, user-friendly video conferencing has proven successful.
The problem is the bottomless pockets of the tech world’s leaders. Amazon, for instance, just launched pay-as-you-go video calling that costs users as little as $3 a day and is capped at $15 a month. That’s not an economic model that a video startup can easily follow. Nor can the new entrants compete with the whole-of-office apps like Office 365 and G-Suite that accompany offerings from Microsoft and Google.
There’s probably enough room in the multi-billion-dollar market for Zoom-sized companies to survive well into the future. The majority of those funds, however, are likely to be heading to the reserves of Google, Amazon, Microsoft, and co. Choice is important–and Slack has shown there’s always a market for innovation–but the majority of companies just want reliability and performance.