Who’s Hosting Video Services?
Wholesale central stations commonly offer video monitoring today — but with relatively low demand, many have not moved into hosted video yet.
It’s becoming increasingly commonplace for third-party central stations to offer video monitoring services — sometimes known as managed video services — such as remote video guard tours, video verification of alarm signals and video escort services. But often these services represent a relatively small percentage of the third-party central station’s total revenues.
“It’s not a huge part of our business,” comments Kevin McCarthy, national sales manager for wholesale central station Emergency24, with headquarters in Des Plaines, Ill. The biggest seller is video verification but most of those sales are to areas such as Milwaukee, where local regulations drive demand, McCarthy notes.
“Our video business is growing, but it’s a small portion of what we do,” adds an executive with another wholesale central station who asked that his name not be used. Many dealers, he says, are “just dabbling” in video services.
Perhaps that’s why third-party central stations are taking their time about moving into what has now become the cutting edge of video service delivery — hosted video services. These services enable business customers to avoid capital expenditures on digital video recorders (DVRs) by offering secure remote storage of video images for a monthly fee.
McCarthy says Emergency24 has equipment in place to store video but hasn’t put a price structure in place for it because “we haven’t seen the demand.”
Emergency24 is one of three central stations SDM interviewed for this article that offer video monitoring but have no specific plans to offer hosted video — although the executive who asked not to be identified noted that his company might consider offering hosted video in the future.
In the meantime, a new crop of companies has emerged that is focused heavily on the hosted video opportunity, sometimes with a managed services component, as well. Some of these companies might be considered competitors to wholesale central stations, but most say they would like to work with those central stations in the future. In this article, SDM talks with several of these new companies about the hosted opportunity and the role that third-party central stations could play in the game.
Niscayah Invests Big in Video Hosting
Supporting remote hosting of end user video requires a substantial capital investment in storage equipment and in a secure data center to house that equipment. Nevertheless, companies such as Niscayah USA have taken the plunge. Niscayah is a systems integrator that sells video hosting and monitoring services to other systems integrators, including PSANet members.
“We operate an ultra-high-security Tier 4 data center,” explains Ed Meltzer, director of the cloud hosting program for Niscayah. The Tier 4 designation is based on several tiered standards established by the Telecommunications Industry Association, with Tier 4 data centers meeting the most rigorous standards.
That data center stores video streamed to it from IP cameras or IP encoders based on the frame rate and resolution established by the customer, which Niscayah retains for the time period specified by the customer. Customers also are advised to use local network attached storage (NAS), a more economical alternative to a DVR or networked video recorder.
“Our offering provides redundancy for little or no price difference,” Meltzer notes. “Customers can record at a higher resolution locally and lower resolution remotely at the same time.”
A critical element of Niscayah’s offering is customized software that integrates recorded video stored in the data center with the company’s central station automation system. That software used development software called AVHS (for Axis Video Hosting System) from Chelmsford, Mass.-based IP camera manufacturer Axis Communications as a starting point. But from there, Niscayah made a substantial investment to customize that software, explains John Nemerofsky, vice president of sales and marketing for Niscayah.
Niscayah also adds value to its hosted and managed video offerings through deals it has negotiated with 20 different communications service providers, all of whom offer broadband connectivity to Niscayah’s data center. End users then can purchase broadband connections to their locations from among those providers, obtaining substantially better pricing than they would obtain on their own. And because the connection does not run over the public Internet, customers get a higher level of security.
“Once you have that connectivity, you’ve opened up greater economies of scale to larger customers,” Meltzer comments. Rather than focusing on basic four-camera systems, Niscayah’s hosted offerings can support much larger systems because of this economical broadband connectivity, Meltzer says.
Niscayah’s offering may be particularly appealing to systems integrators that previously had few recurring monthly revenue opportunities because of a focus on video and possibly also access control, but not intrusion protection. Niscayah is open to reselling its offering through third-party central stations, but “they’re usually not prepared” for what’s entailed in doing that, Nemerofsky comments.
Another advantage for Niscayah from using Axis as a platform for its video offerings is that end user cameras can be added easily to the system, Meltzer says.
Matt Krebs, business development manager for Axis, explains how this occurs. When an installer clicks on a button on the back of an Axis camera, Krebs says the camera “will find its way home and will be plug-and-play — it’s meant to provide installation companies an easy way to deploy the camera into a hosted video environment.”
Axis is establishing a network of companies such as Niscayah to support hosted video offerings, Krebs explains. Using that approach, he says, enables Axis to have a “fully vetted hosting environment.”
Video Management Capabilities Differentiate Secure-i
Another twist on video hosting comes from Des Plaines, Ill.-based Secure-i — a video hosting provider focused only on hosting that does not offer video monitoring. In addition to saving end users money by eliminating the need for a DVR, Secure-i adds value by providing a hosted video management platform that can be used by authorized end users to look in on their cameras, as well as by the dealers that install the end users’ video systems, explains Brian Lohse, Secure-i business development director.
The Secure-i solution is particularly appealing to organizations with many locations, Lohse describes. “With this you can log in to a single interface — it’s designed for large applications where you can organize locations by region and zone and can easily click back and forth between different organizations. Corporate loss prevention has control of everything.”
And from the dealer’s point of view, the Secure-i solution simplifies customer service upgrades and support.
The Secure-i solution has an auto-connect feature similar to what is available from Axis. “Cameras automatically connect to the service,” Lohse explains. “There’s no need to do port forwarding or static IP addresses or configuration.”
Secure-i sells its hosted offering to dealers and through third-party central stations. Some dealers are not interested in offering central station-managed video offerings such as guard tours or escort services, instead simply offering Secure-i’s service on a stand-alone basis.
But for those that want a higher level of integration, the Secure-i software platform integrates with Immix central station automation software from Tampa, Fla.-based SureView Systems, and Secure-i is working on agreements with other central station software providers to also integrate with their offerings.
An Education Process
Hosted and managed video services normally are priced by the number of cameras involved and, when storage is involved, pricing is calculated based on camera resolution, frame rate and how long the customer wants video to be stored.
In comparison with alarm system monitoring, Meltzer says per-account recurring monthly revenues on hosted and managed video should be higher and margins should be “the same, if not better.”
Even dealers that only install five managed or hosted cameras per month can quickly build some “nice RMR — there is very much a snowball effect,” Nemerofsky observes.
So why aren’t third-party central stations seeing more interest in these services from dealers?
Lohse argues that it’s a matter of education. “The big challenge is teaching integrators how to sell this,” he comments. “You need to identify very specific applications that have a clear value proposition.” Cut sheets with messages that are highly targeted for those applications can be a big help in making hosted video sales, Lohse says.
Systems integrators also may need to rethink how salespeople are compensated. Those salespeople typically focus on the dollar value of an installation — and in comparison monthly recurring video hosting fees may not appear to be worth the bother, Lohse thinks. To overcome this issue, he recommends that integrators commission salespeople on the entire length of the video hosting contract as though they were selling a server.
Considering the costs required to support hosted and managed video, it could be that only the largest dealers and systems integrators will make the investment required to support such offerings themselves. Siemens, for example, dedicated “substantial resources” to integrating its central station automation software with its key video suppliers to support managed video services, notes Phil Atteberry, Siemens director of managed security services. Siemens entrusted that task to its central station software supplier, with Siemens personnel providing project direction.
Smaller security dealers and integrators may not want to make that kind of investment, which means that as managed and hosted video services gain in popularity, dealers and integrators are likely to turn to third-party central stations to meet their video hosting and management needs. In the long run, that means hosted and managed video services could be an excellent opportunity for third-party central stations, even though some central stations say they don’t see much opportunity today.
Managed Video Service Minimizes Need for Guards
Companies in certain industries have unique surveillance video requirements, explains Wade Pinnell, vice president for Troy, Mich.-based managed video services provider Huffmaster. To meet mandates established by the Department of Homeland Security, some facilities need to be able to report an intrusion as it is occurring.
“They can’t use a traditional central station, because it doesn’t meet the real-time definition,” notes Pinnell.
Huffmaster offers a managed video service that is well-suited for business customers subject to these requirements. The company’s operations center is staffed by security officers trained in situational awareness. In essence they are providing surveillance in order to identify potential perpetrators conducting their own surveillance. What gives the would-be criminals away are “characteristic signature behaviors,” explains Pinnell.
Huffmaster’s services also may be used by companies that may not be subject to DHS requirements but that want to minimize premises-based security personnel. “Most things security officers can do on-site we can do remotely,” Pinnell says.
For example, Huffmaster personnel can activate security systems and unlock doors, eliminating the need to have an extra security guard on hand for when another guard must forego surveillance responsibilities in order to deal with tasks such as those.
Huffmaster’s operations center isn’t a central station, Pinnell explains. But it may be a central station’s first contact in the event of an alarm. “If someone broke a door down, the central station would receive an alarm and my operators would already be looking at it,” he describes. When the central station calls, he explains, “we can say ‘We’ve got it.’”
Huffmaster is in the process of establishing a program for security dealers wanting to resell its offering. The company also has been in discussions about working with third-party central stations — although it does not yet have any formal agreements in place.
Acadian Monitoring Services Takes Hosted Video Plunge
One third-party central station that is an early adopter of hosted video is Lafayette, La.-based Acadian Monitoring Services.
“A popular offering is for a hosted video one- to four-camera location with motion-only recording and storage in a retail environment,” observes Kenny Savoie, director of monitoring services for Acadian. “With this type of system you can offer the customer a quality product with ease of use from their standpoint and an affordable monthly operating cost.”
Video is stored off-site at a partner location on a platform that is compatible with Acadian’s remote video monitoring platform so that Acadian operators can view video on the customer’s behalf. The video monitoring platform also supports managed services such as remote guard tours.
Acadian has a dedicated team of operators to support its video services accounts. “We require some sort of law enforcement or military background for these personnel,” Savoie notes. “Because they are often witnessing crimes take place in real time, we need individuals that are trained to ascertain a situation, respond appropriately and communicate effectively with police.”
Savoie says hosted video “is still a relatively new concept but has been growing in conjunction with our remote video monitoring offering.” He predicts that “as advancements continually emerge in IP-based security you will see more convergence in this area.”
Three years ago, less than 5 percent of Acadian’s dealer base was active in IP security monitoring. But today, Savoie says more than half of the company’s dealers have at least expressed interest in or attended workshops and webinar training about IP monitoring.
“We are definitely on the cusp of a market explosion,” Savoie believes.
Niscayah, Secure-i and Huffmaster are just three examples of companies focused on delivering hosting and managed video services for security dealers and third-party central stations. Others include:
• All American Surveillance, LLC: www.allamericansurveillance.net
• Brivo, OVR WebService™: www.brivo.com/products/ovr
• InstantLynk: splitpinetech.com
• Iveda Solutions, Managed Video Hosting: iveda.com/index.php/video-hosting
• iWATCH Communications: www.iwatchcomm.com/
• NAVCO: www.videometrixs.com
• PhySecure: www.physecure.com
• Pro-Vigil: www.mycamserver.com
• Seimitsu: www.seimitsu.com/security-products.php
• Terrafox Networks: terrafox.com