Analysis of the global web conferencing market

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Growing Competition and Price Pressures Push Vendors to Seek New Ways to Differentiate The global web conferencing software market is experiencing significant shifts with emergence of new services, mobility, and social collaboration disrupting the status quo to create new opportunities. Demand for web conferencing has increased significantly as companies implement efficient collaboration across dispersed teams. Improved user experiences and expanded use cases are further driving adoption. Mobility enhancements and growing integration with workflows and business applications will create new growth opportunities. This analysis provides web conferencing providers and their partners with a detailed analysis of the current and changing dynamics in the fast-evolving marketplace. Executive Summary The global web based video conferencing market is experiencing significant shifts with emergence of new services, mobility, and social collaboration disrupting the status quo to create new opportunities. User demand for collaborative technologies continues to grow rapidly triggered by three drivers that are profoundly altering the business landscape: The ongoing workplace transformation, consumerization, and need for flexible work styles The rapid pace of technology change and speed of innovation among businesses The imperative to improve productivity Bring-You-Own-App (BYOA) is leading to a proliferation of non-IT sanctioned applications forcing IT to evaluate user-led solutions in its decision-making process. A proliferation of free or low-priced basic screen sharing tools is bringing in early-stage commoditization. Competition from cloud video conferencing is putting further pressure on prices. Vendors are looking to differentiate by moving from a "one size fits all" approach to solutions that drive specific use cases and business processes. Market shares have shifted with market leader Cisco continuing to lose share at a slow pace while Adobe, Citrix, FuzeBox, LogMeIn (join.me) and others have staked bigger claims in the market. There has been a significant slowdown in the on-premises market, despite strong Lync traction. With the exception of Microsoft, most on-premises vendors have reported slow growth or a decline. North America and Latin America (NALA) remains the largest market in revenue terms, while Europe, Middle East, and Africa (EMEA ) bounced back after a slowdown. Asia-Pacific saw suppressed growth due to greater price-based competition as well as currency fluctuations. Growth Highlights The global multipoint video conferencing market, which includes hosted and on-premises solutions, grew at a healthyX percent in 2012 to reach $X billion in revenue. Video meeting software and services are forecast to grow at a compound annual growth rate (CAGR) of X percent from 2012 to 2017 to reach $X billion by 2017. Video conferencing server solutions continue to evolve from online meetings to social and collaborative platforms. Growth is being driven by the ongoing transition from audio-only communications to richer web and video collaboration. Demand is growing rapidly with several vendors reporting greater than X to X percent growth in usage, primarily driven by a larger base of users and wider deployments. There is clearly an accelerated pace of adoption as the value of web collaboration tools are well understood for productivity enhancements and cost savings. Bookings are growing significantly faster than revenue. While user demand is growing, revenue growth is under pressure due to greater market maturity and the impact of declining revenue per license. Competition is emerging from new quarters. There is a growing impact of alternatives including freemium services and basic screen sharing tools. As price-based competition emerges, differentiation is getting more challenging. The line between web and video conferencing is blurring with the emergence of cloud-based video conferencing services that are beefing up content sharing features. Key trends gaining ground include convergence of synchronous and asynchronous communications due to greater user demand for better knowledge/content management (file sharing, capture, flexible storage, on-demand streaming). Mobile usage is exploding. Users are demanding enhanced meeting features and control from mobile devices. It is estimated that the number of mobile downloads for Internet video conferencing has reached more than X million in 2013. Vendors are increasingly leading with mobile first to enable the transition from content consumption to productivity over tablets and smartphones. Companies that lead in the delivery of mobile collaboration and content will become the market disruptors. VoIP audio has become the defacto mode for several users and is growing very fast. VoIP now constitutes X to X percent of all integrated web-audio contracts for several large vendors. Hosted services remain the dominant model contributing X percent of total web conferencing revenue in 2012, up from Xpercent the prior year. Growth in hosted services surpassed on-premises growth as more users lean in favor of cloud for collaboration needs. Within the hosted services market, growth in EMEA at X percent in 2012 far exceeded the growth in other regions. EMEA saw an uptick in demand, after undergoing suppressed conditions in prior years. In 2012, Asia-Pacific growth for hosted services at Xpercent reflected a slowdown relative to years before. This was due to greater price-based competition as well as adverse impact of currency fluctuations. The outlook for Asia-Pacific remains strong as both the global and regional vendors look at further expansion. Virtual meeting software is swiftly moving away from vanilla online meetings to workflows in the context of business needs. Evolving set of capabilities, that are deeply embedded across key business functions, are enabling information workers and managers to make faster and better business decisions. Among the key applications for virtual conferencing; sales, marketing, and training remain widely used. Use for general-purpose meetings (strategy development, administration, project management) has gone up due to the spread of web conferencing among a larger user base within organizations. Growth in the future will come from expansion into under-penetrated segments of the market including the rapidly growing mid-market as well as verticals such as healthcare, education, manufacturing, and retail. The low end of the market is increasingly getting saturated with offerings (such as AnyMeeting, join.me, Zoom) which have garnered a big user base. Several tier 1 vendors are now offering freemium services to better penetrate SMBs. Among the key trends, WebRTC is gaining traction at a fast pace with the potential to bring in new opportunities in the already fast changing video and webinar service markets. WebRTC will see greatest adoption for customer service applications, where the lower barriers to adoption will promote usage. Limited browser and mobility support as well as ongoing turf wars on standardization for WebRTC will ensure that the sophisticated multi-party web and video clients currently in place will likely remain in demand. Virtualization of communication applications is the next big wave leading to efficiencies and greater flexibility. Major UC vendors are well on the path to virtualize their collaboration stack. CEO's Perspective 1. Online web meeting is moving away from vanilla online meetings to integrations with business applications built into user defined workflows. 2. The growing impact of alternatives, including freemium and basic screen sharing services, is leading to price-based competition making differentiation more challenging. 3. Due to a growing focus on mobile first, solutions must enable the transition from content consumption to productivity over mobile devices. 4. There is a greater user demand for convergence of real time and asynchronous collaboration for better knowledge/content management. 5. Decision making is shifting to IT as bigger deployments gain ground. At the same time BYOA is making users and line-of-business heads key influencers. Market Overview—Key Definitions Hosted Web Conferencing: Based on the SaaS delivery model, web conferencing software is hosted by vendors in their data centers and provided to customers on a multi-tenant basis via the Internet. Offered either as a subscription (flat fee per seat) or on a usage basis (cost per user per minute). On-premises Web Conferencing: Available as a licensed software for installation on servers, the web conferencing application is deployed behind the enterprise firewall and managed by the customer. Typically offered as a converged conferencing or a Unified Communications (UC) solution. Managed Web Conferencing: Fully managed on-site or remotely by a service provider, managed web conferencing services are dedicated to a single customer. They are aimed at users that want more control over meeting content and security Managed web meeting software services are a nascent market today and are expected to grow significantly. Research Methodology and Scope Methodology Primary research with secure video conferencing providers; Frost & Sullivan published reports, decision support databases, company Websites, and other secondary resources. Scope This research covers the market for hosted web conferencing services and on-premises web conferencing solutions. Free screen sharing software allows people to hold real-time, synchronous meetings and conferences over the web. The most basic feature of a web conference is screen sharing, whereby conference participants see content on the presenter's screen. Additionally, audio communications in a web conference can either be done through traditional public switched telephone networks (PSTN) networks or through voice over Internet protocol (VoIP). Typical features of a web conference include: Slide presentation, desktop sharing, and application sharing Web co-browsing and file transfer Integrated PSTN and/or VoIP audio for web-based conference control Public and private chat (text messaging) White boarding and annotation Polls and surveys Recording, archiving, and broadcasting Desktop video This research does NOT include: Revenue from annual software assurance or maintenance programs and ongoing support services—such revenue is associated with the total installed base of licenses and not tied to new license sales. Revenue from stand-alone audio conferencing services is not included. However, in meetings where the vendor seamlessly integrates audio with free desktop sharing software, revenue from "integrated" audio-web conferences is included. Revenue from webcasting services is not included since webcasting represents a distinct market and application. Pure-play webcasting services are excluded from the coverage of this research. Revenue from webinar services offered by web conferencing vendors is included. Examples of webinar solutions that are included are WebEx Event Center and Citrix GoToWebinar. Research Coverage Revenue in this study is reported in US$ (USD) Regional Segmentation—The global web conferencing market is segmented into three regions: NALA (North America and Latin America) EMEA (Europe, Middle East, and Africa), and Asia-Pacific For detailed information, please visit