Virtual Communication Platforms in a Post-Pandemic World
The success of virtual communication platforms was a by-product of the pandemic. As the world re-opens, the demand for online communication begins to fall. In contrast to many industries, the owners of software enabling video conferencing are likely to suffer. The spotlight is now on companies such as Zoom and Microsoft Teams to adapt their strategies accordingly. Survival and continued success will be further determined by the wider dynamics between businesses and their models.
Zoom – A Case Study
Throughout 2020, Zoom was consistently quoted as the victor of the pandemic environment. Reliance on the software for professional and social interactions created high customer demand, generating exponential growth. At the peak of its operations, the company declared “300 million daily meeting participants.” The most recent results for Q2 demonstrate a 54% growth year over year and record revenue of $1bn.
However, a comparison to a growth of 200% in Q1 evidently displays a reduction in momentum. Shareholders will be concerned over the extent and speed and at which reliance on the product deteriorates in the upcoming months. Upon the announcement of Q2 results, the company’s market value decreased by $15 million. Deutsche Bank's Matthew Nikam finds this to be a more appropriate reflection of the company’s true position, bringing its valuation “back down to earth.”
The numbers signal that similar software can no longer rely on coincidental growth. Other companies have already seen full product-life cycles, despite strong results in the early days of Covid-19. Houseparty best illustrates this phenomenon. The interactive video chat application is due to end all operations by October 2021.
The Rise and Fall of Houseparty
Epic Games, predominantly known as the developer of Fortnite, acquired Houseparty in 2019, for $35 million. At the time, the application had around 80 million users. As lockdowns began, the numbers surged, attracting 17.2 million new users in March 2020 alone. However, the immediate success was short-lived. Consumer demand dropped sharply in recent months and the application has already been withdrawn from all app stores before its official closure.
Houseparty demonstrates the volatility of the product. At the Zoomtopia 2021 conference, Zoom attempted to conquer this by announcing novel features. Yet, this strategy alone is unlikely to guarantee stability today. The company may have to resort to other measures to restore investors’ confidence.
Zoom’s attempted diversification
In July 2021, Zoom initially agreed to a $14.7 billion acquisition of Five9, a cloud contact centre software company. However, the bid collapsed a few weeks after the US Department of Justice raised national security concerns over the deal, and the shareholders were advised to vote against the takeover by a powerful proxy group (the Institutional Shareholder Services). It advised Five9 against association with a “volatile stock whose growth prospects have become less compelling."
The Other Major Player - Microsoft Teams
Microsoft Teams is another success story of the pandemic environment. Similarly, the online meeting software faces problems, beyond the recent fall in users.
The technology giant has been heavily criticised over the incorporation of Teams into the Microsoft 365 package. In July 2020, Slack officially addressed this by filing an antitrust complaint to the European Commission. It believes that tying the services together deprives customers of choice, violating EU competition law. In the UK, these issues are likely to be flagged up in the Competition and Markets Authority’s latest consultation on the technology industry.
The extent to which the application’s popularity is driven by automatic integration into the software remains unclear. Yet, the upcoming release of Windows 11, equipping laptops with a pre-installed Teams button, suggests that growth should be greatly attributed to this model rather than pandemic habits.
Conclusions
The exponential growth amongst virtual communication platforms correlated with the extension of lockdowns. Today, the chances of survival are higher for application addressing productivity rather than social interactions. The benefits of accessibility and simplifying communication are unlikely to be easily forgotten alongside environmental merits. Although they may overlap, challenges to prospective growth should be separated from issues posed exclusively by the return of in-person interactions. This creates a picture that is too complex to confidently predict the position of virtual communication platforms in a post-pandemic world.
By: Zuzanna Potocka