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Zoom - Welcome to the New World of Video

August 1, 2013 | Telepresence Options

zoom videoconferencing

Story by Phil Edholm / UC Strategies

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."

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