The future of video conferencing is here—but it’s still too expensive
It’s one of the biggest challenges facing cloud-based video conferees: cost.
In the past year, the cost of installing, maintaining, and deploying a cloud-wide video confederator has ballooned to nearly $4 billion.
The cost of deploying video conferences in individual buildings has grown by an astounding $3.3 billion, according to a report from IDC, which tracks the financials of the video conferentry industry.
That means that if a conference center in one city costs $500 million, and an individual conference center costs $100 million, that conference center alone will be paying more than $3 billion to operate and maintain a conference room.
The rise of cloud-specific technology is also putting additional strain on traditional hardware and software costs.
Cloud-based conferences have long used hardware from a few companies, and that makes it difficult to scale up to meet demand.
That’s particularly true of large events, such as large corporate conferences, where infrastructure costs are high.
As a result, a lot of conference room hardware has been sold off, and the remaining space in a conference hall is rented out to other vendors.
“In the future, many companies will be selling off entire rooms in conference rooms, and this will make it difficult for those vendors to compete,” said Scott Purdon, head of the cloud business at technology consulting firm Convergence Group.
The high cost of operating a conference space also means that people are willing to pay more for video confers.
In 2015, the average cost of renting conference space in the United States was $300 per month.
The average cost for renting conference rooms worldwide was $1,000 per month, according the Conference Industry Association.
“You’re seeing this in many countries around the world,” Purdan said.
The high cost means that conferences can’t attract enough attendees to make a profit, so people are opting for a cheaper option—like renting a space at a cheaper price.
“This means you can make less money,” Pudon said.
“So it’s going to be harder for conferences to make money.”
But that’s not necessarily the case in the U.S., where the costs of operating and maintaining a conference are lower.
For a typical conference, Purden said, you’d have to rent a space for $10,000 a month.
“We don’t have the infrastructure to make that happen,” he said.
In the meantime, conference companies like Convergence have begun moving away from a central location and into smaller conference rooms.
“The cost of making space for a conference has gone down, and people have found that more and more convenient to live in,” Pudd said.
“It’s an unfortunate trend that the cloud has driven,” said Dan Fincke, an analyst at research firm Gartner.
“It’s very easy to move from a conference to an event and it’s very difficult to move back.”
“It is unfortunate that the current trend of cloud conferenced events is being driven by a lack of infrastructure,” he added.
Finckes also pointed out that the cost to host an event can vary greatly depending on the size of the conference, the number of attendees, and whether the conference is open to the public.
“If the conference room is big enough, it can cost $10 million, but if it’s small enough, the room can cost only $10,” he explained.
The costs of maintaining and upgrading video confilers are another concern.
While some companies are selling off their entire conference room, other conferences are leasing rooms from other companies.
“That means that the conference will be more expensive and you’ll have to make up the difference,” Pundons said.
There are also additional complications to conference room rentals that are likely to increase the cost for conferences.
For example, a conference may be in need of a new conference room because there’s no room left in a building, Pudons said, which could put a dent in the conference’s profits.
“There are lots of reasons why a conference might need a new room,” he continued.
For those reasons, conference rooms can be rented for a lower price.
But that also means there are more rooms available, which may drive up the price of renting a room.
“As conference room rents have gone up, you’ve got a bigger number of rooms available,” Pudge said.
Conference space costs have increased over the past several years, and a lot has been made of the fact that these costs have fallen.
However, a closer look at conference room data reveals a different story.
In 2017, conference space costs accounted for about 15 percent of the total cost of a conference, according a study from research firm IDC.
In 2020, it accounted for 11 percent.
But over the next year, those numbers dropped, with conference room costs increasing by 5 percent.
“These trends show the cost growth for conference rooms is accelerating