Business Video Usage Requires Adjustments in NSPs’ Planning

Zeus Kerravala, founder &principal analyst, 2K Research

Zeus Kerravala, founder &principal analyst, 2K Research

July 19, 2012 – The escalating volume of non-entertainment applications for network-transported video spells new opportunities for network operators who factor the capacity and functionality requirements of these segments into their infrastructure strategies.
The enterprise video impact extends to marketing and training; real-time applications in surveillance, home security, distance learning, digital signage, healthcare and video-based collaboration and conferencing, and robust file transport in advertising, motion pictures and myriad other enterprises, The scope and pace of growth adds up to a lot of business for NSPs who are equipped to support market demand.

“Online video is not just the purview of TV and entertainment companies, although media and entertainment companies certainly account for a large percentage of the revenue in the online video platform (OVP) market today,” says Melissa Webster, program vice president for content and digital media technologies at IDC. “We see a tremendous and rapidly growing opportunity among organizations and agencies of all kinds that want to use video to communicate with their key constituencies and build customer loyalty and engagement.”

A variety of recent studies and reports shed some light on the size and growth potential of some of these verticals:

• Digital Signage – Intel has been watching this market with keen interest, noting that analysts’ predictions call for CAGR in the 35 percent rage over the next few years. In a recent blog, Jose Avalos, retail sector general manager for Intel’s Intelligent Systems Group, says the company has raised its prediction for total digital sign deployments worldwide by 2015 from 16 million to 22 million in light of falling costs and growing awareness of the effectiveness of the medium. “Digital signage has demonstrated a continuing ability to reach large audiences in a targeted way at a point where it really matters: at the point of sale or, at a very minimum, when consumers can easily alter their travel plans to go to a point of sale,” Avalos says. “Additionally, digital signage system integrators have emerged as an engine of growth, particularly in meeting the need for turnkey solutions for the SMB market. In fact, many system integrators have doubled their revenues year over year for the last couple of years.”

• Distance Learning – In a recent presentation, “2012 Education Technology Market Watch,” officials from the Center for Digital Education, a national research and advisory organization, reported the market for online education is growing at the K-12 as well as higher education levels, driven by budget cuts and growing acceptance of the effectiveness of digital-based instruction. Over 14,000 public school districts nationwide now have implemented distance learning components to their curriculums with enrollment toping 49 million students, they report. At the higher education level a total of 4,494 four- and two-year institutions use the technology with an enrollment of exceeding 25 million. While most of this activity is over the Internet, in contrast to distance learning projects that once used closed circuit video system to reach students remotely, the need for good connectivity is vital to market growth, the researcher note. Presently, they calculate the amount spent by K-12 schools on network services and telecommunications links is in the range of $1.6-$1.8 billion nationwide.

• Video Surveillance – This traditionally analog application employed on premises for security purposes at big companies has exploded into a global phenomenon where digitization with HD cameras and use of wide area networking to centralize multi-facilities surveillance and cloud-based security services have transformed methodologies and the scope of usage. Dublin-based Market and Research predicts the total market for surveillance cameras, other equipment and services will grow at a 35% CAGR from about $20 million in 2010 to $38 million in 2015.

IMS, in a recent research report, says a growing number of suppliers are offering HD-over-Coax surveillance systems, with projections calling for a doubling of demand this year. Cloud-based surveillance, also known as Video Surveillance as a Service (VSaaS), saw 20-30 percent sales growth in 2011, IMS says. This is still an emerging market, but the researcher believes it will grow rapidly, fueled in part by the combining of other applications into the VSaaS package, such as use of videos to stream location images to consumers over the Internet and for other non-security purposes in combination with other apps.

• Telepresence and Videoconferencing – Infonetics Research reports this market is growing worldwide, “fueled by a confluence of factors, including the proliferation of video-capable equipment, demographic and communication trends that favor video, industry use cases like tele-learning and tele-medicine, and most importantly, customer demand,” according to Matthias Machowinski, directing analyst for enterprise networks and video. “Sales of telepresence and videoconferencing equipment surged in the past two years, with growth accelerating in 2011 as video took off on enterprise IP PBX systems,” he says.

Sales of videoconferencing and telepresence equipment were up 34 percent to $2.99 billion in 2011, Infonetics reports. It says dedicated multi-purpose room video systems made up over half the enterprise videoconferencing equipment market in 2011 and will continue to be the biggest revenue-generator among enterprise video solutions.

As for general-purpose applications of video for business operations, the market is replete with evidence that video applications have entered the mainstream owing to ease of use and low costs of production, buttressed in part by services such as thePlatform is offering. In an advisory to business clients of all types, Zeus Kerravala, founder and principal analyst at 2K Research and former senior vice president and distinguished research fellow at the Yankee Group, says corporations who are not exploiting the benefits of video risk falling behind competitors.

“Highly structured, vertically siloed companies cannot respond to increasingly shorter windows of opportunity,” Kerravala says. “Over time, video will eventually overtake voice as the primary communications medium for corporate workers.”

Because so much of this activity is fairly new and accelerating rapidly, much of network operators’ planning for accommodating IP-based unicast video traffic is centered on the explosion in consumer video consumption on connected devices. But the steps taken to expand network capacity, to improve efficiency through use of private CDNs and to develop software and cloud-based support for video processing and feature enhancements should take into account the non-entertainment side as well if operators want to capitalize on the full scope of the opportunity taking shape in the IP video domain.

Businesses and institutions need the same types of support systems network operators are putting in place to accommodate consumer access to premium TV services over IP connections, notes Duncan Potter, chief marketing officer at Edgeware, which supplies a server-based platform for maximizing efficiency and quality in video distribution. “The same functionalities we’ve built into our Distributed Video Delivery Network framework can be applied to support operators’ efforts to serve the needs of businesses for reliable and high-quality video distribution,” Potter says.

This applies to support for specific verticals as well as the video traffic generated by internal business operations, he adds. “Digital signage, distance learning and video surveillance are good examples of fast-growing areas where efficient management of video distribution is essential to a service provider’s ability to serve these markets,” he notes.

While travel savings remain the biggest driver behind business use of video, comprising about 33 percent of the instances where it is the primary driver, improved collaboration is now the largest driver combining primary and secondary causes, by a margin of 55 percent to 50 percent over travel, according to a recent Yankee Group survey. Improved productivity and green-related gains are other primary drivers.

“As organizations reap the travel benefits, the value proposition for video moves beyond cost savings to productivity, and even to agility and competitive advantage,” says 2K Research’s Zeus Kerravala. Benefits extend to all levels of the organization, he adds.

“Critical decision makers spend less time away from the office, while simultaneously increasing face time with clients, prospects or internal co-workers,” he notes. “Sales teams find that video-based follow-up calls and product overviews increase customer satisfaction due to increased responsiveness. With video, organizational communications are clearly conveyed directly to employees, wherever they are. Training can be “in-person” virtually and can be captured for broader sharing and on-demand availability.”

Horizontal applications abound as well. “Examples include customer engagement, patient consultation, experts on demand, remote training and security,” Kerravala says. “As video continues to mature, these use cases will give rise to the concept of a video-enabled business process.”