Video conferencing market growth is strong enough right now to make someone’s fortune twice over.
Take the case of Eric Yuan. He founded and then sold video conferencing provider WebEx to industry giant Cisco a little more than a decade ago. Then he stuck with the new parent company for about five years before leaving to start a new video platform, Zoom. Today, Zoom is valued at $1 billion.
The video conferencing market is currently predicted to grow 20% each year, which is expected to drive the industry’s current worth of $16 billion up to $41 billion by 2022. The affordable, user-friendly nature of newcomers such as Zoom and an emphasis on simplified video conferencing hardware is in part responsible for this popularity.
However, some industry leaders are warning that not every new video conferencing entrant will experience Zoom’s rise. One, in particular, believes 2018 could be the year we start to see a video conferencing market crunch.
Video Conferencing Consolidation
That expert is Vice President and General Manager of Logitech Video Collaboration Scott Wharton, who thinks the video conferencing market is approaching an era of change. He recently noted that he expects a drop in the number of video conferencing providers, beginning in 2018.
“Video as a primary form of communication is becoming mainstream, and adoption rates continue to increase thanks to popular applications like Skype, FaceTime, and Google Hangouts.
“But the market is getting crowded, and we can expect consolidation in the cloud video conferencing (VCaaS) and web conferencing space, with multiple vendors getting acquired, going bankrupt or leaving to focus on other areas of the market.”
So, what will this age of consolidation look like?
A New Way to Win Video Users
Cisco’s purchase of Eric Yuan’s WebEx platform is an example of how large tech companies have traditionally dealt with rivals. Whether it be to directly eliminate competition or–more commonly–to improve or expand their existing service (think Microsoft buying Skype or Google taking over YouTube), the rule has been that big tech fish eat little ones. Plenty of startups are actually actively looking for such an acquisition as a way to survive and thrive.
That methodology has changed with two of the most recent startup disruptors. Workplace collaboration app Slack and social media platform Snapchat were seen as acquisition targets of Microsoft and Facebook respectively, before both the bigger players had a change of heart. Instead, both of the tech giants decided to imitate their young rivals and use their vast existing user numbers to win a war of attrition.
So far, the strategy has worked. Facebook’s Instagram has more users than Snapchat, while Microsoft Teams picked up 30,000 business clients within months of its launch. Could this be the way giants like Facebook and Google thin the video conferencing herd?
Video Conferencing Market Growth and the Big Players
Again, Scott Wharton has some relevant insight to share–he predicts that together, Facebook and Google will earn more than 50 percent of what the world spends on advertising.
As a social media platform and a search engine, Facebook and Google are near unrivaled in this country. As video conferencing providers, they are just getting started. Google finally settled on a lineup of video offerings late last year, and Facebook entered the enterprise sphere with Workplace by Facebook just a year and a half ago.
If they do as Wharton expects and divide up half the world’s $557 billion annual advertising spend between them, they’ll have an unprecedented war chest with which to fight any video conferencing battle. Add in their existing advantages with user numbers and the G-Suite of business apps, and you’ve got a truly global pair of VC companies–and Facebook has already started work on its first video conferencing hardware.
It’s likely they won’t be the only tech companies to become leaders in the video conferencing field. Amazon entered the race with its Chime app last year, (led by Jeff Bezos, whom Wharton believes will become the first person to hold a $100 billion fortune) and while it wasn’t the revolution it promised, the company’s domination of Software-as-a-Service almost guarantees it’ll disrupt cloud video calling. This doesn’t mean some of the smaller companies don’t have a chance–Vidyo and Zoom, to pick just two examples, are high-quality services which have been very successfully competing with the tech giants thus far.
Still, it’s conceivable that within a few years a power trio like Google, Facebook, and Amazon could help radically trim the video conferencing market down to just a handful of providers. Then we’d have greater reason to ponder a final prediction from the Logitech vice president:
“The European Union will file a major antitrust action against one of the top five tech companies.”
*** Repost from VC Daily by Sophia D on March 20, 2018
***Image Sources: Flickr CC User Ryan McDonough