The State of Enterprise Video 2024

In several of the State of Enterprise Video arti­cles I’ve written for the Streaming Media Source­book over the past 2 decades, I’ve opened with an adage—those sayings of the “a penny saved is a penny earned” variety that are at times both be­lievable as truisms and so generic that they can’t be wrong. A few years back, though, I shifted toward ob­servations, such as this one from 2020:

Up until the past 2 years, and with the advent of cloud-based solutions, enterprise video was of­ten overlooked by an industry focused on chang­ing the way entertainment video is consumed by a global audience. In some ways, this oversight was understandable, as most corporate video is used for internal communications, regulato­ry compliance, or training purposes, and most of it never goes beyond the confines of the cor­porate firewall.

The problem with observations in an annual ar­ticle like the State of Enterprise Video is that they often turn into inadvertent predictions when real-life problems occur. For instance, that same observation I made in early January 2020 didn’t account for a single word (“COVID-19”) that upended enterprise video delivery.

By the time 2021 rolled around, I had to admit in the Sourcebook that my ob­servation “was accurate for a small portion of 2020” and then had to remind readers to ignore almost everything I’d posited the year before, since enter­prise video became one of the fastest growth areas in streaming. After the initial shock, companies transi­tioned their desktop-bound office workers to remote logins from home. Innovative companies moved the desktop to the data center and sent home a thin-client device that allowed remote access to the desktop at the corporate data center.

Those effects are still felt today in a continuous flow of online meetings—including “all hands” and multiday events such as the Streaming Media Con­nect conferences—as well as the return-to-the-office mandates that led, in part, to the Great Resignation in late 2021 and early 2022.

So, I’ve learned my lesson, and for 2024, I’m not going to bore readers with a trite adage, nor am I going to make an observation that may be inaccu­rate in a year’s time. Instead, I’m going to reach into the world of enterprise finance and borrow a phrase that’s been swirling in my head as I try to make sense of where enterprise video is headed: “Past perfor­mance does not guarantee future results.”

In finance, almost every prospectus has those words in it, serving more as a cover-your-ass umbrella for stock, mutual fund, and retirement investment instru­ments than as an effective warning for the potential investor. At its face value, the phrase is so overused that it’s lost much of its impact. And it’s not just that way in finance: Given that we all know about the un­predictability of a “sure thing” investment, odds-on favorite sports teams, or even a blockbuster star­ring a famous actress or actor, it’s a commonsense phrase that should make us all think twice about how we spend limited resources.

Testing the Past-Performance Theory for Enterprise Video

To better understand how the “past-performance” scenario plays out, let’s look at it from an enterprise video standpoint, which encompasses both stream­ing and videoconferencing, by comparing projected versus actual growth rates of the overall enterprise video market.

How has the enterprise video market grown over the past 4 years? Consider this: In the 2019 pre-pandemic time frame, projections showed that en­terprise video would increase at a compound annual growth rate (CAGR) of 6.8% by 2026, rising from $14 billion in 2018 to an overall valuation of $24 billion by 2026. By the beginning of 2021, the CAGR projections showed an increase from 6.8% to a modified 11.6% for the same time frame. Additional data revealed that the actual baseline had shot up to $16.4 billion in 2021, with a projected CAGR of 13.8% for the 2022–2030 time frame. Research from 2023 indicates that the enter­prise video market may be outpacing even these rosy CAGR models, with one report stating that enterprise video reached $18.3 billion in 2022, with a potential of reaching $48.4 billion by 2030.

These are rosy numbers indeed, and readers of this article in early 2024 might look at the previous paragraphs and opt to put all of their streaming eggs in the enterprise video basket, given that the enter­tainment streaming space (or at least the VOD por­tion of it) is struggling at the moment to gain overall traction. But here’s where caution is advised.

A 2022 article in the Journal of Experimental Psy­chology: Applied reports that when potential investors read the past-performance warning, it may have an opposite effect, drawing them toward an investment instrument rather than away from it. The article notes that despite the warnings, the average investor focus­es on past performance above all else when deciding among various investments. The snappily titled article (Persistence Is Futile: Chasing of Past Performance in Repeated Investment Choices) notes the psycho­logical effect of the warning as being, at best, count­er-productive. The baseline experiment centered on various forms of the disclaimer line among groups of participants. “Participants persistently chased past performance despite the opportunity to learn about the futility of this strategy during 60 repeated deci­sions with feedback,” the article states. “The standard regulatory-mandated disclaimer did not help most participants, compared to giving no advice at all, and was even counter-productive for participants with low levels of financial literacy.”

So how does all of this practically tie into enter­prise video streaming? It appears that the industry, with no clear direction for enterprise video growth— including innovations in enterprise video platforms (EVPs)—runs the risk of relying on past performance as an indicator of customer growth and resource al­location for technical innovation.

In addition, here’s a confession from my end: I strug­gle with the correlation of past performance of cloud-based enterprise systems against current and time­ly enterprise streaming needs in early 2024. In fact, even with the warning signs that started popping up in late 2022 and grew exponentially throughout 2023, it seems that cloud-based enterprise video solutions are more popular than ever, even as they offer limit­ed overall value.

Let’s look at three interconnected areas of past per­formance for EVPs: pricing, parity (functionality), and protection (security).

Pricing

Despite record profits for large enterprises, includ­ing several in the streaming industry, the looming specter of price increases continues to set IT depart­ments everywhere on edge. One can see it in the price of bandwidth and the price of servers, for example, and it doesn’t seem to have yet found an equilibrium.

One of the biggest conversations at last year’s on­line Streaming Media Connect events and in-person Streaming Media shows was about the cost of cloud-based services. I’d strongly encourage you to read our State of Streaming Snapshot: Pinpointing Stream­ing’s Pricing Pain Points article, which covers several key points from the State of Streaming Autumn 2023 survey. While survey respondents surfaced a number of pain points around the lack of advertising dollars to off­set growing delivery costs—including one respondent who said that “unsteady revenue from advertising and unpredictable viewership” were key concerns—the fact is that EVPs are a cost center to most enterprises. The bottom line is that pricing is a key differentiator between a media online video platform (OVP) and an EVP solution, with EVP solutions often priced higher than equivalent OVP functionality.

Unlike on the entertainment side of the industry, en­terprise costs can’t be offset by selling ad slots to play for employees participating in a live or on-demand viewing of enterprise content. Sponsorships do help offset the cost a bit, but even that’s not as popular for internal EVP content delivery as it is for customer-facing content. Pricing pain points will continue well into 2024, lead­ing to questions around parity of on-prem solutions as enterprise looks to lower its overall cloud bills.

Parity

What about the functionality of EVPs? Have they reached parity with on-prem EVP solutions? The an­swer isn’t a straightforward “yes” or “no,” but rather an “it’s complicated.”

On the one hand, cloud-based EVPs are much eas­ier to access for basic content uploading and subse­quent consumption. On the other hand, there are dis­tinct limitations in many EVPs that make the content workflow harder than with an on-prem solution. And it still turns out, here in early 2024, that cloud-only solutions are still not quite as robust as most EVP ven­dors make them out to be. However, many solutions that sit inside a firewall aren’t as easily upgraded when it comes to on-prem EVP offerings. One reason for that, as I’ll explore later, is the security require­ments that are unique inside a Fortune 500 enter­prise’s closed network.

This leads to another continuing advancement in the EVP space: hybrid cloud/on-prem solutions. In that regard, cloud services can often be updated more rapidly. We’ve been pounding this drum consistently over the past 8 years: Cloud-based solutions work, but hybrid solutions work better.

The case for hybrid solutions, in which parity is main­tained in lockstep between cloud and on-prem compo­nents, makes sense for another reason: the hybrid na­ture of today’s enterprise workforce. In the 2010s, there were two enterprise employee types: “office dwellers” and “road warriors.” The cloud was a way to put some internal-facing content outside the firewall for use by both road warriors and key partners or customers. 2020 changed all of that, with the majority of employ­ees located outside the physical office space.

This hybrid work approach has been persistently prevalent. Despite return-to-the-office ultimatums popping up numerous times over the past 3 years as a way to force employees back into the office full time, many companies continue to offer a hybrid approach with as few as 1 or 2 days per week in a physical office. And that effect is reflected in the ongoing downturn in office rents, which are expected to drop by 4% in 2024, as many multiyear corporate leases come up for renewal.

Even if enterprise work habits return to “normal”—meaning more employees are working from a cor­porate facility than are working from home—one key lesson that’s expected to continue for at least the next several years is that the old paradigm of a few road warriors needing to connect to corporate live-streaming events via a VPN or cloud-based net­work is no longer viable from both a technological and pricing standpoint. As one State of Streaming 2023 survey respondent put it, “Functionality that can be easily moved to the cloud will be moved to the cloud. Functionality that makes more sense (from a cost or bandwidth perspective) to keep on premises will be kept on premises. A good example for func­tionality that is kept on premises is an eCDN.”

So, hybrid solutions, such as eCDNs (enterprise content delivery networks), are here to stay. How­ever, to truly make the hybrid solutions work, par­ity between on-prem and cloud-based functionality is a must.

Protection

In many of the recent surveys we’ve conducted for Streaming Media, a major concern is security. One question, which has been repeated across multiple surveys, asked respondents to tell us why they chose or rejected cloud-based solutions. In keeping with the dual messages that accompany the “past per­formance does not guarantee future results” state­ment, we heard equally compelling arguments for and against security benefits for cloud-based video platforms. On the one hand, respondents would state that the cloud was “more secure” or that they re­lied on the larger security departments at the cloud-based solutions provider to handle ever-changing threat vectors. On the other hand, some respondents said they were barred from using cloud-based vid­eo platforms due to security issues. One 2023 survey respondent summed it up this way: “Private clouds offer greater control over data security and com­pliance since resources are not shared with others. This is especially important for organizations that handle sensitive data or operate in highly regulat­ed industries.”

Limiting content access to employees—or even subsets of employees, based on their current role— isn’t unique to enterprise video. A number of efforts are underway to harden cloud-based content securi­ty to the level of on-prem security, and respondents point out that cloud services dedicate greater mind­share to protecting content than the typical enter­prise IT department.

But protection continues to be a defining watershed for Streaming Media’s enterprise readers as they make decisions about where to store their sensitive content and how best to distribute it to a select audience.

Conclusion

Stepping back from the three key areas—pricing, parity, and protection—and looking at the wider pic­ture around enterprise video, expect to see a move in 2024 toward higher-quality enterprise live streaming. I anticipate companies that are downsizing their phys­ical office footprint, adapting to the hybrid work mod­el with smaller offices, or even opting for a lower-cost office environment will still want to maintain a pre­mium image. The best way to do that in our video-first world is to invest in live-streaming environments that exude quality. While these have been built in many en­terprise headquarters for use by company spokespeo­ple or C-suite executives, there’s a potential trend on the horizon in which these premium live-streaming environments could be used for smaller regional meet­ings or even by key subject matter experts.

In addition, as mobile streaming quality and capa­bilities continue to improve, there’s a good chance that enterprises will invest in upgraded “home stu­dio” environments for executives and key personnel. This can be a way to leverage backgrounds in Mic­rosoft Teams and Zoom meetings that are both real and convey a sense of the enterprise’s core functions.

Then again, as investment salespeople are quick to point out with the “past performance does not guar­antee future results” warning, there’s no guarantee that we won’t be back here in early 2025 looking at large-scale enterprise video as a purely in-office ex­ercise. That’s unlikely, given the fluidity of enterprise work, but planning for both scenarios should help Streaming Media readers who are focused on enter­prise video balance the unknowns of 2024.

The State of Enterprise Video 2023

From road warriors to remote-only companies, enterprise video is shifting. It is, to put it mildly, in a state of flux. At the same time, though, so is the state of business. Given those two facts, the question I'll attempt to answer in this year's State of Enterprise Video is whether these coexistent movements will occur in lockstep or as polar opposites.

12 Apr 2023