Video calling: The base goes mainstream, but usage remains niche
Deloitte believes that in 2011 video calling will be cheaper, better and more widely available than ever; yet a boom in demand is unlikely. Use of video calling will likely continue to grow steadily. However, we expect the vast majority of calls -- both for business and consumer uses, and on fixed and mobile networks -- will remain purely voice-based, and that most people who really need to see each other will continue to opt for face-to-face meetings rather than videoconferences.
There are two main reasons why video calling is unlikely to experience an inflection. First, for conversations that can be handled by phone, a voice-only call will continue to suffice in most cases; video exceeds needs. Second, in situations that require a deeper level of interaction, a video call, despite many recent innovations, still cannot compete with the richness and depth of a face-to-face meeting.
Many commentators have heralded 2011 as a breakthrough year for video conferencing, citing lower costs, higher quality, and an expanding range and volume of video-ready devices in the marketplace1. In fact, one research firm has forecast that the number of mobile video-calling users in North America will rise by a CAGR of 115 percent through 2015, generating 9 petabytes of additional data traffic2. But in our view these advances will likely not be sufficient to catalyze mass market adoption of video calling in 2011.
It is true that television-based video conferencing that offers sufficient quality for business calls should become significantly cheaper in 20113. Television manufacturers and videoconferencing specialists are both expected to expand their television-based offerings in the sub-$10,000 range4. This contrasts sharply with the price range for room-based, multiple-screen video conferencing solutions, which can start at more than $100,000.
Also, many more devices are likely to include built-in video-calling capabilities. Deloitte’s estimate is that about 400 million new devices with the required forward-facing video cameras will ship in 2011, including smartphones, tablets5 , netbooks, desktop computers, laptops, MP4 players and GPS units6.
Meanwhile, the quality of video calls -- including ease-of-use, image resolution, audio-video synchronization, and reduced jitter and lag -- should steadily improve thanks to technological advances such as improved compression software, higher broadband speeds and increased integration with social networking sites7. LTE technology – wherever it is deployed in 2011 – should offer a better experience due to its superior video call handling capabilities relative to HSPA variants8.
Despite these broad improvements in video conferencing, as well as the larger installed base of devices that can support video calling, Deloitte does not expect a dramatic increase in the volume of video calls.
For businesses, the use of video calling is likely to remain modest. Most business conversations simply do not require a video call. And despite falling prices, the cost of setting up a video conferencing system and dedicated room may still be prohibitive, even for businesses that are trying hard to reduce their travel costs.
There is also a question of who they can call. A company that is willing and able to invest in a high-end, multiple-screen video conferencing solution to reduce its carbon footprint may find few peers with compatible equipment. In fact, during 2011 there may still be significantly more airports in the world than companies with the ability to hold a high-end video conference9.
Business could of course use the embedded cameras within laptops to make video calls. However, the quality may not be acceptable given the typical size and resolution of such cameras; individuals sitting in front of their lap tops cannot recreate the feeling of a group meeting. Also, calls from open plan environments and offices not dedicated to video conferencing might require erasing white boards or removing confidential materials to prevent them from appearing in the background.
For consumers, the volume of video calls should continue to rise modestly, but a spike in usage seems unlikely. Many consumers see video calling as an undesirable compromise between voice-only calls and in-person meetings. If people just need to communicate, a standard voice call is more than sufficient. And if they really want to see each other, there is no substitute for in-person meeting. Can video calls create meaningful value in the no-man’s land between these two extremes? To date, video calls have proven popular with families stretched across countries or continents – especially those with newborns; however, market penetration within the segment is already relatively high, which could limit future growth.
Cost is also an important factor. Higher service charges would likely dampen enthusiasm for video calling, as would higher charges and stricter caps for mobile data.
Last but not least, one of the key factors that could limit the growth of video calling is that it tends to make people self-conscious10. Many of us are unfamiliar and uncomfortable with seeing moving images of ourselves; this can be distracting and dampen spontaneity. Also, we might feel the need to change clothes or apply make-up before the call, which creates an extra inconvenience. Over time, increased familiarity is likely to boost our comfort level. But it might take a generation for video calling to become pervasive.
The video call, in all its forms, has advanced significantly since it was first demonstrated in 196411 . Technologically it has made major strides over the last decade, in terms of quality, functionality and price. But despite these advances, it appears that hundreds of millions of people equipped with video-calling devices are not quite ready to make the video call a regular part of their lives12. At least not in 2011.
In the business world, relationships and trust are often built on conversations at bars, restaurants, taxi rides, golf courses and the company water cooler. Video calling cannot replicate these kinds of experiences.
Moreover, while video conferencing might be price-competitive with business-class travel and five-star hotels, the growing acceptance of low-cost flights and budget accommodations makes in-person business trips more economically viable.
Video calling is generally better for the environment than carbon-intensive travel. However, businesses looking to make a major investment in video calling capabilities should consider all of the factors – environmental and otherwise -- including the additional resources required to build a dedicated room for video conferences.
The value of any network is linked to its size, which is why interoperability is critical. Video calling’s potential would be severely constrained if users were limited to communicating with others that use the same vendor’s equipment.
1For example see: The Human Cloud Is A Greener Workforce, Reuters, 12 November 2010: http://www.reuters.com/article/idUS278531536120101112;T-Mobile and Qik Launch Breakthrough Mobile Video Chat Service, Qik.com, 3 November 2010: http://qik.com/blog/t-mobile-and-qik-launch-breakthrough-mobile-video-chat-service/;Polycom Delivers Breakthrough Video Integration for Microsoft Unified Communications Environments, Polycom website, 9 February 20 10: http://www.polycom.com/company/news_room/press_releases/2010/20100209_1.html
2Mobile Video Calling Drives for Critical Mass: Revenue to Surpass $1 Billion by 2015, In-Stat, 27 October 2010:http://www.instat.com/newmk.asp?ID=2898&SourceID=00000652000000000000
3Cisco unveils home video conferencing system with $599 price tag, Total Telecom, 7 October 2010: http://www.totaltele.com/view.aspx?ID=459191;For a list of Skype-enabled televisions, see: http://shop.skype.com/skype-for-tv/#skype-enabled-tvs
4Skype Goes HD: Pro-Quality Videoconferencing for Small Business with LG, Panasonic TV’s, TechStartups, 5 January 2010: http://www.techstartups.com/2010/01/05/skype-goes-hd-pro-quality-videoconferencing-for-small-business-with-lg-panasonic-tvs/
5Apple iPad to Have Two Cameras?, Gaj-it.com, 30 October 2010: http://www.gaj-it.com/26553/apple-ipad-to-have-two-cameras/
6For example, see: https://buy.garmin.com/shop/shop.do?pID=26876&ra=true
7High definition video calls will become available on tablet computers. Source: Galaxy Tabs to soon have access to HD videoconferencing, Computerworld, 9 November 2010: http://www.computerworld.com/s/article/9195659/Galaxy_Tabs_to_soon_have_access_to_HD_
videoconferencing;also see this article for a view on the improvements in quality available at the smart phone level: Apple’s FaceTime freakin’ rocks , iTWire, 28 October 2010: http://www.itwire.com/your-it-news/mobility/42749-apples-facetime-freakin-rocks;see this article on Skype video calling integration into Facebook: Skype and Facebook announce video calls deal, Telegraph, 14 October 2010: http://www.telegraph.co.uk/technology/news/8063498/Skype-and-Facebook-announce-video-calls-deal.html
8This is due to better signalling capability for video calls.
9There are approaching 50,000 airports in the world. For data on interoperable high-end video conferencing equipment, see: AT&T and BT in telepresence exchange, Financial Times, 1 December 2010: http://www.ft.com/cms/s/0/6adeaf40-fcb1-11df-bfdd-00144feab49a.html#axzz16qWDQMf2
10For example see: Call Me! But Not on Skype or Any Other Videophone, Time, 18 January 2010: http://www.time.com/time/magazine/article/0,9171,1952314,00.html
11Will Videoconferencing Replace the Telephone?, PCWorld, 25 November 2010: http://www.pcworld.com/businesscenter/article/211699/will_videoconferencing_replace_the_telephone.
12As of September 2010, 19 percent of US adults had tried a video call via their PC or mobile phone at some time. Source: Pew Research Center’s Internet & American Life Project Survey, PewInternet, 13 October 2010: http://www.pewinternet.org/Reports/2010/Video-chat/Findings.aspx