- Zoom’s audio and video conferencing solutions have been a huge driver of remote work.
- Adoption of Zoom during the pandemic resulted in 300+% revenue growth and 350 million daily users in 2020.
- Looking ahead, Zoom is expanding its strategy to focus on competitive international markets and phone solutions.
When a brand becomes a verb (think Uber, Google, or Photoshop), you know they’ve achieved success. Today, Zoom is the go to platform for video conferencing. As the pandemic forced businesses around the world to close, many companies migrated to collaboration and communication apps to remotely host staff and client interactions. Zoom benefitted hugely from this trend, experiencing more than 300% revenue growth in 2020.
Being a freemium service, Zoom has a business model to make money by up-selling users into paid plans. Here's how it works in more detail.
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What does Zoom do?
Founded in 2011 by CEO Eric Yuan, Zoom is one of the most popular streaming and video conference platforms available. The company grew to prominence in 2020, beating out Skype as the preferred choice for conducting business remotely over streaming platforms.
Zoom went public in April 2019 at $36 per share, closing up over 70% on their first day of trading. Though Zoom’s outlook for growth is positive, there are growing threats to the company's reign at the top of the videoconferencing market. Recent security issues and the potential for the app to lose out to innovation remain concerns.
How does Zoom work?
Zoom uses simple technology. As a SaaS company, Zoom allows individuals and companies the chance to communicate virtually through a unified communications platform. The platform offers three primary communication tools, namely, chat, audio calls, and video calls.
Zoom users can host one-on-one chats or video conferences for up to 500 attendees. Participants coordinate live streams through screen sharing, making it easy to share information in the session.
Zoom experienced a boost in worldwide adoption thanks to its core products, Zoom Meetings, Zoom Rooms, and Zoom Workspaces. Zoom’s streaming and hardware solutions are available globally and the company has a list of top Fortune 500 companies using its solutions, such as Delta Airlines, NASDAQ, and even banking firms.
Participants in Zoom Meetings can enter the session through a desktop or mobile application or web-based browser platform. The Zoom Chat feature allows users to communicate via an extension to its Meeting product. Users can chat, create groups, and share files.
The Zoom Workspaces and Rooms products allow companies to utilize hardware solutions to host a virtual meeting using their mobile device, desktop, laptop, or camera.
Zoom focuses its Workspace product on larger organizations that want to host meetings across several office locations. Zoom makes hardware integration easy by offering organizations hardware solutions to manage their organization's communications.
Some of the other products developed by Zoom include the following.
Zoom phone
This cloud-based phone system comes with intelligent routing, automated call attendants, voicemail, dialing destinations, call-recording, and more.
Zoom video webinars
Organizations can large-scale online events featuring video screen sharing and simultaneous audio with no lag.
Zoom app marketplace
Users can select and install third-party applications like Slack, HubSpot, Trello, and more.
How Zoom makes money
Zoom makes the majority of its earnings from subscription fees charged to B2B customers. They operate on a "freemium" model, meaning users have access to basic features for free and can pay additional subscription fees for different features within the product itself.
The company's standard freemium model allows users to hold group meetings with up to 100 attendants, with sessions lasting up to 40 minutes.
Their customer list includes a who's who of the world's top companies, adding to its reputation as the market leader in remote-based communication solutions for business.
Premium Plans
Zoom earns most of its money by charging for premium plans for its service.
Zoom Meetings & Chats
The Chat and Zoom meetings product it's the company's flagship offering. Users can cast a video call or jump onto a chat with colleagues or friends with this subscription.
The freemium version limits sessions to 40 minutes, while the premium version allows for unlimited session lengths. Businesses can pay for a monthly or annual subscription with a tiered pricing plan for small teams, small to medium companies, and large enterprises.
Zoom Rooms & Workspaces
This product provides users with virtual conferencing systems allowing companies to run video-call meetings and conferences. Customers can purchase the hardware through Zoom or choose to run through existing Cisco or Polycom systems.
B2B customers pay Zoom a subscription fee for using the service, with monthly or discounted annual plans.
Zoom Phone
This Zoom product offers users cloud-based calling solutions for companies that don't come with any phone bills. Users have the option for audio or video chat, and they pay a monthly subscription fee for calls within US and Canada with add-ons for global service.
Zoom Video Webinars
Zoom's Video Webinar package is for organizations that want to run web-broadcasting conferences and large events online. Users get up to 10,000-view-only attendees per event with a single license, with customized pricing for up to 50,000 attendees. Zoom also requires the user to purchase a webinar license, and it offers special packages to organizations in the fitness, education, healthcare, and financial industries.
Future growth engine
Zoom continues to stay ahead of the pack with aggressive marketing campaigns directed at organizations. The company plans to focus more on the B2B model rather than accumulating its private user base.
Since the money is in business subscriptions, it's easy to understand why Zoom wants to pursue this route. However, the company understands that it needs to continue to market and innovate to stay relevant. In addition, Zoom will have to address ongoing security concerns in the industry.
Zoom plans to continue its focus on the growing video conferencing market, expand its international customer base, and encourage adoption of its phone solution, a large avenue for growth.
Competitors
Zoom is one of the leading tech solutions focusing on video streaming solutions for the B2C and B2B markets. However, the company faces tremendous pressure from other top tech firms offering similar phone and video conferencing solutions.
Zoom's top competitors include large established players like Google, Cisco, Adobe, and Microsoft as well as smaller companies such as LogMeIn, TeamViewer, BlueJeans by Verizon, and 247meeting.
