At the 2010 Consumer Electronics Show in January, the home electronics industry was all abuzz about 3DTV. While this was certainly an important topic, most of the press and analysts in attendance missed the much bigger story about television: video chat.
Both Panasonic and LG announced that they were going to include support for Skype video communications in select models of their HDTVs, marking a major development in how people will talk with each other over distances. The fact is that consumer visual communication – video chat – is an application that is likely to sell more TVs over the next few years than 3-D.
Worldwide, corporations are increasing their use of telepresence systems to improve communications across distances and to save on travel expenses. Moreover, anytime travel is disrupted, the impact on business is unquestionable. As this report was being prepared for publication, a volcanic eruption in Iceland led to the closure of most of Europe’s airspace and demonstrated how tenuous our transportation systems can be. This event alone is sure to spark increased interest in corporate telepresence systems.
But consumers and small businesses represent the vast majority of the market for communications, and a shift from the traditional telephone systems to Internet-based solutions is expanding the potential for video communication in these markets. Skype now accounts for 12 percent of all international calls. The move to IP communications is often initiated by its lower costs, but consumers are discovering additional features and benefits, such as video chat. More than one third of all Skype calls involve video, and when you consider that the company’s call volume is measured in the tens of billions of minutes per month, a lot of video calls are being made. And that’s just with this one service.
One of the key factors boosting uptake of video communications is that a significant portion of the market already has all of the equipment it needs. Instead of having to spend $10,000 to $100,000 or more for a dedicated corporate telepresence system, most people already have what they need in their existing laptop or desktop computer. (If they don’t, they can add a webcam with a microphone for less than $50.) Meanwhile, a majority of consumers and small businesses now have broadband access to the Internet; widely available Wi-Fi service means that they still have access even when away from the home or office.
This has eliminated the “symmetrical” problem of traditional video communications, which required specialized compatible equipment at both ends of the conversation. Most of the people you know already have the requirements to accept video chat. As a result, consumer video communications is growing rapidly, and hardware manufacturers are responding to the trend. Samsung has joined LG and Panasonic in building Skype support directly into some of its HDTVs. And if recent reports are to be believed, Apple’s next version of the iPhone will have a forward-facing camera, making video chat possible on that device.
Currently, video chat is being used as a more effective replacement for the phone call. We can expect that it will take on new roles, however, as consumers and businesses become more comfortable with it as a communications tool. We’ll see extended telepresence applications become more common, such as sharing a mealtime with someone far away or having a shared open “window” into a distant office.
Opportunities abound in many areas as a result. In addition to the primary functions of providing the hardware, software and services required to support consumer video communications, the larger data streams also have implications for broadband service providers and related industries. There will also be opportunities for existing and new companies to provide new services to consumers and small businesses based on video chat communications.