Zoom - Welcome to the New World of Video

One of the major emerging areas in communications in 2013 is VCaaS - Video Conferencing as a Service. There are a number of new companies in this space, including Vidtel and Blue Jeans. And there are a number of emerging free WebRTC video conferencing players like Bistri, Tawk, and FACEmeeting. This week, Zoom, another relatively new player, announced their current operating numbers, with over two million meeting attendees to date and 4,000 meetings per day in June, they seem to be growing rapidly. Based on data from the company, in June they had 367,000 attendees for almost 120,000 meetings. These are impressive numbers for a new company and reflect the capability of Zoom to deliver their service for as little as $9.95 per month or free if you are willing to live with 45-minute meetings (I actually think this is a benefit - limit those long meetings). Zoom is claiming that they are the largest VCaaS vendor at this point based on that volume. Unfortunately, this is a bit difficult to compare as both Blue Jeans and Vidtel are paid-only business models (they have a trial, but you must buy the service to continue) and Zoom is deploying a "freemium" model that only charges only if you want meetings longer than 45 minutes. As Zoom was not able to indicate the percentage of paid subscriptions, it may be more appropriate to compare Zoom to Skype or Google, both of which appear to be at least one to three orders of magnitude larger (though they do not allow the larger number of simultaneous users per meeting that the VCaaS providers like Zoom allow).

The Zoom model also shows how challenging the "freemium" video conferencing market is. With the average Zoom meeting being 85 attendee minutes and three attendees, this means the average meeting is 27 minutes long, less than the 45 minute limit for free meetings, so literally all of the Zoom meetings in June could have been free. If the paid percentage is 10 percent of the meetings and the average paid account has one meeting per week (four per month), that means there are 12,000 paid meetings per month and a total of 3,000 paid accounts or $30K in monthly revenue at this point. In other words, a total of about 1,500 to 6,000 paid subscribers is probably reasonable for Zoom at this point in their growth. The challenge this illustrates is that "freemium" models only work of you get to very large numbers of total users are have alternative monetization (advertising). With a $10 per month model and 90 percent free subscribers, generating a $120M annual revenue stream on subscriptions alone requires 1M paid subscribers and 9M free subscribers (10M total). At 10 percent paid and $10 per month, a billion dollar video business requires almost 100M total subscribers or lots of advertising revenue. And experts in the "freemium" model claim that the actual percentage of paid is generally less than 5 percent, doubling that number to 200M. Anyway, this shows both how the video market is fracturing and changing and how challenging the business models are in this new world. Having a clear use case and requirements is the only way to choose among the options or to build a sustainable business model. And, if all you want are relatively short/average length video meetings, at least for now, they are "free."

Zoom also announced a major partner push called "Works with Zoom" to integrate to existing premise video systems and new components, including Logitech (but not LifeSize) and AVer, as well as a number of camera and microphone providers. This shows that video conferencing, while becoming personal with end point device video, still needs room systems and video peripherals beyond a webcam and headset. What is interesting is that companies like Zoom are looking to build out that ecosystem from partners, versus building the room systems themselves. The same equipment vendors are actively partnering with the other players as well. I think this is an interesting trend, and as WebRTC rolls out through this year and next, we will see this type of ecosystem emerge in that arena as well. The impact of this transition is going to be huge. Whether you use a service like Zoom, Vidtel, or Blue Jeans, or one of the emerging WebRTC players, the ability to put together a room or large display "executive" office system for a fraction of the current price points is now possible. In fact, with Samsung putting HD cameras and quad processor Smart TV functions in their televisions (including a browser and Bluetooth), how long is it going to be before a video conferencing platform is really just a consumer television with a reasonable speakerphone? I already have a Plantronics Calisto 620 Bluetooth speaker phone. If it could link to my WebRTC Samsung TV with WebRTC, I would have a 50" room video system for around $1,300 ($999 for the TV, $99 for the camera, and $199 for a USB Speakerphone). At the price point of around $1,000, which should come next year, this is the point where most mid-level managers can justify having one in their office.

The net of all this is that the options for video conferencing keep growing, almost at an exponential rate while the value you as a user have to pay is dropping to or is already almost zero. The PC/device/web model is coming to this segment and the changes are huge. In considering a video solution for your business, it is now not just comparing a couple of large players and expensive room systems; there are a whole new host of options. As these new vendors use loose ecosystems for their solutions, an integration partner is even more critical. Another result is that we will have a large number of players and using WebRTC to avoid local downloads for 25 different video systems will be essential. If you go to 10-20 meetings a month, it is likely that you will be using 5-10 different vendor video systems every month. Downloading and keeping up client apps will be impossible (and the fact they all try to stay resident is even worse...). The other change is that these options all tend to use pretty much the same hardware/system partners, which assures that if you make the right local end point equipment choices, you can change vendors easily if your needs change or if your chosen partner's business model fails. With all of this acceleration and free video, how long is it before your customers and partners will expect video of you?

Welcome to the Wild Wild World of Video!!!!