Frost & Sullivan: Conferencing & Collaboration Outlook

We have just completed Frost & Sullivan's 2017 study on the North American conferencing and collaboration services market, with more than 25 participating providers sharing their insights on an ever-evolving space.

Frost & Sullivan found that the North American conferencing and collaboration services market earned revenues of $5.0 billion in 2016, growing at 4.9% from 2015. Audio conferencing accounted for 48% of the market, cloud-based Web and video conferencing 44.3%, and managed video conferencing services 7.7%, by revenue share. These proportions are expected to significantly change by 2023, with cloud-based Web and video conferencing services representing 67% of the total conferencing services revenue.

Revenues from audio conferencing services continued to decline, earning $2.4 billion in 2016, which represented a 3.9% drop. Increased VoIP usage, the move toward all-in-one communications and collaboration solutions, PSTN bypass, and the general maturity of audio conferencing services are expected to continue to negatively impact the revenue opportunity for audio conferencing services. The market is expected to incur a negative 5% compound annual growth rate (CAGR) within the forecast period.

Revenues from cloud-based Web and video conferencing services continued to grow by 15.8% and reached $2.2 billion in 2016. Cloud-based Web and video conferencing technologies have come a long way within the last five to seven years to capture user interest. They've become affordable to acquire/access, simple to provision/use, easy to integrate, and attractive to engage in. Aside from the now very clear value proposition of visual meetings, growing user comfort with video collaboration and increased access to higher-quality Internet connections, improving the overall end-user experience is driving increased cloud–based Web and video conferencing demand.

While more end users than ever are engaged in visual collaboration, growth rates of cloud-based Web and video conferencing services are expected to decelerate gradually over the forecast period. This drop-off will result from the rising popularity of all-in-one cloud communications and collaboration services that include conferencing as a checkbox feature. The traditional dividing lines among business telephony, messaging, collaboration, and conferencing are becoming blurred and new offers from UCaaS and team collaboration workspace providers are expected to gradually take away share from stand-alone multimedia conferencing.

Revenues from managed video conferencing services grew by 7.5% from 2015 to reach $387.5 million in 2016. In spite of the move toward cloud communications and collaboration services, managed video conferencing services are still expected to incur revenue CAGR of 4.5% during the forecast period. Key trends such as outfitting open meeting spaces and huddle rooms with proper video conferencing systems; offering remote monitoring and management of the entire meeting solutions ecosystem (beyond the conferencing infrastructure); and managing a new ecosystem of video endpoints, such as advanced collaboration "boards" (e.g., Microsoft Surface Hub, Cisco Spark Board, and Google Jamboard) are likely to act as important drivers for future demand of managed video conferencing services.

Competition in the business meetings realm has been skyrocketing. The North American communications and collaboration market, of which conferencing services are part, is experiencing increased competition from a variety of players. These range from technology companies (e.g., Amazon, Google, and Microsoft) that include communications and collaboration features in their software suites, to call control and UCC providers that target the market from a telephony angle, and to new team collaboration providers (e.g., Atlassian and Slack) that are entering the space from a messaging perspective.

While the competition benefits end users, it leaves traditional conferencing service providers with the paramount challenge of adapting to newer consumption modalities in order to stay relevant. Aside from looking to expand their partner ecosystems so they can act as the "behind the scenes" conferencing technology of various communications and collaboration solutions, many have been considerably reshaping their multimedia service offerings to better adapt to evolving market dynamics.

During the next years of the forecast period, and as North American cloud communications and collaboration services continue to evolve, providing value beyond functionality will be key. The conferencing and collaboration services market has reached a point whereby feature parity exists with providers on a generalized basis. With little feature differentiation, focusing on strengthening customer service and support will be key.

Furthermore, during the next years of the forecast period, different conference service providers are expected to increasingly explore merger and acquisition options. Examples of recent such activity include LogMeIn's merger with Citrix's GoTo family, PGi's acquisition of ReadyTalk, and Video Guidance's merger with BCS Global to form Pinnaca. Despite existing market challenges, meetings will continue to be the heartbeat of many North American businesses. Providers that effectively adapt to changing industry dynamics and commit to delivering the best service to customers will reap the greatest benefits.

Learn more about Cloud Communications and Video Collaboration & A/V at Enterprise Connect 2018, March 12 to 15, in Orlando, Fla. Register now using the code NOJITTER to save an additional $200 off the Advance Rate or get a free Expo Plus pass.