Video Conferencing Firms See Boost From European Snow Chaos

Video conferencing companies are seeing increased demand for their services due to the chaos caused by the current spell of icy conditions across most of Europe, adding to the boost they received from travel disruptions earlier this year as a result of the Icelandic volcanic ash cloud.

Due to the cold snowy weather hitting the continent over the past week, several European airports have been forced to cancel flights while some, including the UK's Gatwick, were forced to close down completely.

But companies which offer business travellers an alternative to physical meetings expect these disruptions to bring them more customers.

Regus PLC (RGU.LN), which operates a network of business lounges, has opened its doors to snowbound travellers in the U.K. and some countries on the continent, where they can use facilities like the Internet for free and also book video conferences, press spokesman Henry Collinge told Dow Jones Newswires.

Regus, which uses video conferencing gear from U.S.-based Polycom Inc. (PLCM), has seen a 40% to 50% increase in video communication since the volcanic eruption in Iceland which grounded much of Europe's air fleet during April and May this year, said Collinge.

Video conferencing demand should get a boost from the recent travel disruptions, he said, because when people are forced to try out alternatives to physical meetings, they realize that virtual conferences are a viable option.

In addition to the harsh weather conditions, European air transport has been further hit by a strike at Finnish airliner Finnair Oyj (FIA1S.HE), and as a result Danish telecom operator TDC A/S (TDC.KO) is offering free video conferencing for stranded travellers in the Nordics.

The ongoing strike and weather chaos show how sensitive communication-dependent companies are to disruptions, and thus offer TDC a good opportunity to showcase its virtual meeting services, said TDC Sweden's head of videoconferencing sales, Lars Schon.

Companies have typically used video conferences instead of physical meetings to save money, but incidents like the recent disruptions and the volcano ash cloud have also highlighted their use in reducing vulnerability, he added.

Video conferencing is growing rapidly with the global market expected to jump to around $8.6 billion in 2013 from around $4.9 billion this year, according to research firm Gartner.

To take advantage of this growth trend, U.S.-based IT company Cisco Systems Inc. (CSCO) earlier this year completed its $3.3 billion takeover of Norwegian video conferencing gear maker Tandberg, which delivers equipment to service providers including TDC.

Still, while the video conferencing market is growing rapidly, extraordinary events like snow storms and volcano eruptions don't tend to give much of an instant sales boost, said Gartner research vice president Scott Morrison.

However, he said, severe disruptions make businesses more interested in alternatives to travel, and some of that interest will translate into higher long-term demand.

People are more likely to communicate through video conferencing when there are others who also use the services, so the current strong demand could well create a virtuous circle for the market, Morrison added.

By Gustav Sandstrom, Dow Jones Newswires; [phone]; [e-mail]