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Futurewatch 2009: What's in Store for the Enterprise?

Editor's Note: This article will appear in the 2009 Streaming Media Industry Sourcebook, to be published in February. To be sure to receive your copy of the Sourcebook, subscribe to Streaming Media magazine here—it's free!

The ingredients for snuffing out growth prospects in the business video technology sector are seemingly all in place.

Recent stock market gyrations fuel uncertainty. Continued credit crunch concerns limit available capital for corporate investment in sophisticated webcasting solutions. And one of the leading sectors for buying technology that enables online video—the financial services industry—continues to wrestle with its own downturn of historic proportions.

Put it all together, and it’s a mighty convincing recipe for significant spending cutbacks in the world of online video—a rapidly expanded segment of the technology market still striving to establish itself as "must have" technology in the halls of corporate America.

Nevertheless, the ripple effects of economic turmoil have yet to wash over the business webcasting sector. As industry executives head into 2009, most are reporting that the sales pipeline is still full and that corporate users are still exploring new investments in platforms that enable video-enriched business communications.

And leading vendors in the business webcasting sector, such as Accordent Technologies, continue the hunt to bring new employees on board to address the growing wave of opportunities.

"We have not seen any pullback in demand as a result of the economic crisis," says Accordent chief executive officer Mike Newman. "We’re as busy as ever."

Undoubtedly, hurdles remain to be crossed in 2009. One uncertainty is whether the end of 2008 may somehow represent a last hurrah for webcast spending growth as corporations spend down their 2008 budgets, which were allocated before the worst of the current economic storm hit the corporate sector.

Most executives involved in the business webcasting market, however, say they have not yet seen major cutbacks in 2009 spending plans. One explanation for the resiliency of the webcasting sector may be that it promotes technology many companies perceive as a cost-reduction tool. Technology vendors have long touted online video as a platform that saves money by allowing companies to forego travel expenses for large corporate meetings by shifting selected regional events online.

Another factor favoring the continued expansion of the corporate webcasting sector is the growing diversity of the companies implementing the technology. No longer solely a novelty deployed by Fortune 500 companies with huge technology budgets, corporate webcasting spending increased nearly across the board in 2008.

A higher percentage of companies from virtually every corporate-size category boosted their spending on online multimedia in 2008 over 2007, according to a survey of 1,212 executives conducted by Interactive Media Strategies in the second quarter of 2008. For instance, 46% of companies with more than 25,000 employees increased their webcasting budget in 2008 compared with 31% who increased online multimedia budgets in 2007.

And this intention for expanded online multimedia spending appears to span the corporate spectrum. The only set of companies where executives demonstrate a decreased likelihood for boosting online multimedia budgets in 2008 are the firms employing less than 100 people—a sector of the market that typically accounts for only a tiny fraction of all online multimedia spending.

A Positive Outlook
Early indications are that the trends supporting increased spending on webcasting will carry through to 2009. Interactive Media Strategies forecasts that total spending on webcasting technologies in the coming year will total $605 million, up more than 30% from estimated spending of $460 million in 2008.

As spending on business online multimedia expands, distinct technology segments will become increasingly apparent. The single most important trend to watch will be the growth in "software-as-a-service" (SaaS) solutions, which are beginning to emerge as an alternative to the long-favored "on-premise" tools that companies have traditionally used in the deployment of online multimedia capabilities. Last year, corporate spending on on-premise tools outstripped spending on SaaS by a nearly 2-to-1 margin. But significant future growth in the market will come from SaaS options, with annual spending on these alternatives topping $600 million a year by 2012, according to Interactive Media Strategies estimates.

Along the way, expect the on-going shift in the types of technology solutions that create the greatest value for corporate users and the most revenue for online multimedia technology vendors to continue. Products that enable enhanced content-management capabilities will draw the largest share of expanding corporate budgets for online multimedia over time. While the demand for tools and services that enable the creation of rich media content will continue to grow, content management is emerging as the future cornerstone for market expansion. Between 2008 and 2012, revenues attributed to the content management sector are forecasted by Interactive Media Strategies to quadruple to more than $500 million while the content creation side of the business sees cumulative revenue climb from $244 million in 2008 to $349 million by 2012.

Rather than being a victim of today’s unsettled climate, business video appears to be on the way to becoming one of the drivers that helps to pull us out of our economic doldrums.

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