State of the Market: Video Surveillance 2013
Despite continuing challenges, there is money to be found in the 2013 video surveillance market.
Two tiny acronyms: IT and IP.
A3 Communications, Irmo, S.C., is an expert in both. Founded as an information technology (IT) company 20 years ago by chief executive officer (CEO) Joe Thomas, the company added Internet protocol (IP)-based surveillance and access control to its portfolio in 2005.
A3 Communications has high expectations for 2013 that are driven by IP.
“We anticipate that our 2013 surveillance revenue will increase by a minimum of 50 percent and our number of sales by 25 percent. For 2013, we feel this increase will be based upon a significant adoption of IP and a heightened awareness of security needs in our society as a whole,” says Brian Thomas, president, A3 Communications, pictured on this month’s cover.
The addition of IP was a “natural move” due to the company’s IT background, according to Thomas.
A3 Communication’s background and subsequent embrace of IP reflects two of 2013’s trends in the video surveillance market — the ballooning presence of IT integrators and distributors within the industry (a really good sign there is money in the market) and the increasing usage of IP technologies.
Those are just two of several notable trends and important advancements the security industry (manufacturers, distributors, dealers and integrators, end users and analysts) shared with SDM regarding the 2013 video surveillance market that all point to money in the market.
Value added resellers (VARs), along with IT distribution and installing companies from the IT space are adding IP, particularly video, because the traditional IT market is flat. End user organizations are spending money on upgrades to their security solutions within their facilities, says Tom Larson, director of global accounts, BCDVideo, Northbrook, Ill.
Founded in 1999 as Burgess Computer Decisions, an IT-only company, BCDVideo entered into the IP video surveillance marketplace four years ago. BCDVideo refocused from selling to Fortune 500 companies to supporting targeted security integrators. As a global HP OEM partner, BCDVideo assists with both the storage and the intelligent building network, offering IP video servers and storage, all powered by HP technology. “We’ve been recognized for our quick growth over the past years, but it’s not from carry-over business in the IT industry as much as it is from our explosive growth here in video surveillance,” Larson admits.
Even manufacturers are seeing the shift. “One new channel that’s opened up for us recently has been the IT distribution channel,” confirms Surrey, British Colombia-located Lindsay Ryerson, senior manager, product marketing, Honeywell Security Group. “This has in large part been driven by the interest in IP video. IT pros have great knowledge in all things IP, and many of their traditional customers are now asking about video surveillance. So they, in turn, are looking to us to help provide more of those solutions,” Ryerson shares.
IMS Research recently published a report, IP Trends in Security — A Survey of Systems Integrators and Installers, which found that currently 80 percent of North American integrators purchase some IP-based video surveillance equipment from IT distributors. Also, increasingly IT distributors are looking to add video surveillance products to their product range in the next 18 months.
While IT installers are often comfortable adding IP-based products, many security installers are attempting to catch up in 2013. SDM’s own Industry Forecast Study shows that 54 percent of security dealers and integrators now apply their IP network expertise to at least half of the projects on which they work. This number rises every year. (See chart to the left.)
Another key finding from IMS Research was that almost 80 percent of North American systems installers said they required better training from their suppliers of IP-based video surveillance products.
Training remains a critical question mark in 2013 and could have a direct impact on the way sales play out, so it is no surprise that training is a need that remains top-of-mind for manufacturers and distributors moving into 2013.
“Lack of education for the channel can mean the loss of a sales opportunity or, worse, a long-term customer,” says Fredrik Nilsson, general manager, Axis Communications Inc., Chelmsford, Mass.
It’s the speed of IP video innovation that adds to the education challenge — for the entire channel, he adds.
“That’s why we believe so strongly in our Axis Certified Professional program. Our team here in North America conducts hundreds of face-to-face trainings per year to accompany our Web-based modules, online tutorials, and webinars. This year we’re launching new courses that not only help integrators stay on top of the latest products and technologies, but on how to sell them,” Nilsson explains.
More dealers are being trained on IP technology, which helps them understand the value of a networked environment and allows them to successfully sell the benefits to their end users, agrees Michael Flink, president, ADI Americas, Melville, N.Y.
“Last year, ADI offered more than 1,000 IP training opportunities for dealers to improve their knowledge. Our Expo Training Series delivered a stronger focus on IP technology. It is apparent that dealers want to get educated on the latest IP solutions,” Flink observes.
The company also recently launched ADI’s Programming Plus Program that offers a value-added service to prepare all cameras for large IP installations. With this service, dealers can simply install the cameras and alleviate their workload. That’s money saved in labor.
In 2012, Tri-Ed/Northern Video Distribution also pre-programmed thousands of IP cameras with its IP-EZ program as well as loaded servers with sophisticated VMS software.
“This creates a convenience for the dealer and manufacturer and ultimately delivers a great solution to the end user faster,” explains James Rothstein, executive vice president, Tri-Ed / Northern Video Distribution, Woodbury, N.Y.
“Mastery of the network remains another key training/support issue in 2013, says Steve Carney, director, product management, American Dynamics, Tyco Security Products, Westford, Mass.
“While it doesn’t necessarily hinder sales, it definitely hinders the deployment of technology and end-user satisfaction. One of the biggest trends in IP remains megapixel cameras and increased resolution. That has a direct impact on networks — the more bandwidth that is used, the more complex the networks get. We are seeing a continued need to assist in the networking side of the deployment of video surveillance. A large portion of issues we see in the field are no longer product-related but are network-related or storage-related,” Carney describes.
“IP is the vast majority of what we sell,” says Eric Yunag, president and CEO of Sioux Falls, S.D.-based Dakota Security Systems, a PSA Security member.Even end user Bob Grado, Integrated Security Operation Department, RTD Transit Police, Denver is 100 percent IP/HD now.
“We have to use a minimum of 1.3 megapixel and it has to be IP. While we still have 800 analog cameras out there out of 1400+ fixed and 6500+ mobile cameras total, we change them to IP as they break. The Denver Regional Transportation District (RTD) is very progressive and proactive at looking at future technology. To that end, we have a weekly meeting with our video management system (VMS) manufacturer, NICE Systems, Ra'anana, Israel, in person to discuss any issues, expansion, any technical problems — and stay in constant touch. This world is evolving so fast and quality relationships help us stay ahead of the changes,” Grado says.
Similar to what Grado expressed about the transition from analog to IP technology at the Denver RTD, several Honeywell installations also have transitioned to IP.
“In areas where having high image quality is absolutely paramount, IP is driving a lot of investment,” Ryerson says. “Several of our installations, for example, have steadily transitioned from analog to IP-centric operations over the last few years. MGM’s CityCenter complex in Las Vegas is a good example: they use our MAXPRO® VMS to control operations. Another example is the Manitoba Lotteries Corp. We upgraded them from an older analog-based system to our Enterprise NVR integrated with video analytics technology that allows them to monitor point-of-sale transactions,” he shares.
Mid- and large-sized systems from 32-plus up to thousands of cameras per system have essentially all made the decision to switch over to IP, Nilsson asserts. “On the other end of the spectrum we have the small system market of 16 cameras and less per site. Here we’ll see a major growth opportunity for IP in 2013. We can thank recent innovations in IP performance — like low- to no-light-capable digital cameras, HDTV clarity at low cost, and new form factors like covert and 360-degree cameras — as well as the increasing number of low-cost storage options — like SD-card, edge-based storage and hosted video — for making network video a viable, affordable option for small system owners,” Nilsson says.
“Storage at the edge is a signficant trend,” Yunag observes. “It creates more resilient and fault-tolerant video solutions. You can lose connectivity and still have recording at the edge, which allows for the use of traditionally ‘unreliable’ communication links. It also allows for more cloud-storage-related deployments having edge storage as a backup. It brings down the cost of deployment,” he adds.
Another technology shift that has influenced cost restructuring is that many of the VMS platforms — Milestone, Genetec, OnSSI, etc. — implemented 64-bit software over the last year, explained BCDVideo’s Larson.
“It removed the bottleneck on their software and allowed larger amounts of cameras per server. It’s a significant change that is driving up camera counts per server, so the project cost comes down dramatically,” Larson says. “Last year we could run up to 100 cameras on a video server; now we have installations tackling 200 to 300 cameras per server. Since the cost to add a megapixel camera is no longer that substantial, the ability to add multiple cameras and storage to these servers makes it a stable investment for the customer, especially considering BCDVideo's five-year on-site warranty,” he states.
Chicago-based Protection 1, SDM’s 2012 Dealer of the Year, is tapping into the edge as well — to add analytics. "We are testing multiple edge- and server-based video analytic solutions for applications ranging from producing relevant business intelligence to human pattern detection for more precise alarm event monitoring," Lisa Ciappetta, senior director marketing, told SDM.
Technology advancements like edge-based analytics will offer end users new reasons to pull the trigger on video surveillance purchases, says Levy Acs, president and CTO, American Integrated Security Group Inc., College Point, N.Y.
“Historically slow-to-adopt markets are now embracing IP because IP offers never-before-available capabilities such as fully integrated facial recognition, perimeter protection, demographics and thermo-graphic analysis. IP also delivers the ability to integrate other systems to deliver users with a comprehensive view of their overall infrastructure,” Acs explains.
Alvin Segal, director of security, Williamson Medical Center, Franklin, Tenn., confirms that, sharing “the most important advancement in video surveillance is the ability to integrate our cameras with our other security systems. An example would be our officers viewing our cameras on their smartphones while patrolling our facility,” he says.
Rothstein, who reports that Tri-Ed/Northern Video experienced double-digit growth in video in 2012, points out that remote monitoring solutions via smartphones — valued by end users like Segal — are just one of several value-adds to recording solutions.
“There is significantly more value in DVRs and NVRs including more storage capacity, built-in, feature-rich and easy-to-use VMS,” he says.
Darrell Clifton, CPP, director of security, Circus Circus Reno, an MGM Resorts International Destination, Reno, Nev., runs a hybrid system of IP, digital, and just recently got rid of his last VCR.
“I have rebuilt my entire system without capital so I have been creative with using existing hardware alongside new stuff. We have IP cameras and NVRs in one portion of our property and the remainder, I have integrated DVRs into it so it is easier to just add digital, or (sometimes analog) cameras in to the DVRs rather than add NVRs. Being on a low budget, I like to have hardware that can be used with various types of formats and applications,” Clifton says.
Eliminating the NVR/DVR entirely will also gain ground in 2013, supporting growth in the small-to-medium-sized business (SMB) market by further reducing the cost of a system.
“Increasing technology options are making IP video more accessible for small- and medium-sized businesses that have traditionally relied on analog video systems for their security surveillance. For example, IP cameras increasingly offer the capability for edge storage with SDXC or SDHC cards. Combine an IP camera with edge storage and free viewing software like Bosch Video Client and you have a very affordable IP video system for small applications,” says Willem Ryan, senior product marketing manager, Bosch Security Systems Inc., Fairport, N.Y.
Brent Edmunds, sales account manager and part owner of the company, Stone Security, Salt Lake City, Utah, shares, “We are working on successfully putting together a strategy to go after that smaller segment in 2013. The new affordable cameras like the ones from Axis and their edge storage that eliminates NVRs and DVRs — and the advancements that are opening the smaller project size will be something that will change the game for us.”
That’s saying a lot. In 2012, Stone Security doubled in dollar volume and number of transactions and is optimistic it will do so again in 2013.
“A big trend in 2013 is SMB security,” Ryerson agrees. “It used to be that only large enterprises could afford a robust security system. That’s no longer the case because we’ve seen many technologies that used to be considered ‘high-end’ become adapted to SMB applications, and they’re more affordable, too. An example we saw of this in 2012 was the introduction of our “NetAXS-123 with video,” Ryerson says.
Many end users have been saving money by “mixing and matching” as they “upgrade” without replacing entire systems — babying systems, maximizing their lifespan. It’s a mindset you see across multiple industries, illustrated by the auto industry and the increase in end users keeping used cars and not buying new ones, says Shahar Ze'evi, senior product manager, American Dynamics, Tyco Security Products, Westford, Mass.
(Ze'evi is correct: On average, car owners in 2012 had their vehicles two years longer than consumers surveyed in 2001 by auto industry researcher Polk.)
“The end users’ mentality, by definition, requires service providers to help end users be good at maintaining as much of their system as possible,” he shares.
"Companies that offer products that can retain analog, the flexibility of switching out pieces of a system while moving forward into the new technology, will see great success in 2013,” Ze’evi predicts.
It worked for Segal at Williamson Medical Center.
“We currently have an Avigilon operating system with some encoders that support our older analog cameras. The remainder of our 100 cameras is IP HD megapixel types. We had planned to replace the older analog cameras but have found that the encoders enhanced the picture quality of those cameras, thereby allowing us to install new IP digital cameras in additional locations,” Segal says.
In June 2008, AFI ranked “Show me the money” as the No. 25 movie quote of all time. Everyone wants to see the money, including those in the video surveillance market, which, happily, continues to lift the security industry with strong numbers.
“The total value of the world’s security equipment market at factory gate prices in 2012 was $20.57 billion. Of this, video surveillance products at $10 billion took a share of 49 percent. It is the growth in IP network video surveillance at around 30 percent that has pushed up the demand for physical security equipment, reports The Physical Security Business in 2012, Memoori Business Intelligence Ltd. (www.memoori.com/physical-security-2012)
“Generally speaking, I would classify the video surveillance market as ‘growing,’ but depending on what market segments you are focused on, it could range from declining to booming. In our markets, we have seen a growing number of surveillance projects hit the street in the past six months and we don’t anticipate the trend to slow down anytime soon,” says Rob Hile, CEO, Integrated Fire & Security Systems Inc., Fort Myers, Fla.
Mike Jamieson, director, Raytec Systems Inc., Ottawa, Ontario, shares that in 2012 the company’s overall sales in terms of dollars and number of sales were up 60 percent over 2011.
“We expect that growth to continue in 2013 as we introduce some new products and technologies that have never been available in security lighting before. Early in 2013 we will be introducing the first IP-controlled security lighting system. With this new innovation, our customers will be able to actively change their lighting directly or through their VMS to meet the requirements of the system in real time. This is a huge change in the way lighting has been used in security,” he describes.
An integrator/software manufacturer, Acuity-vct, Cleveland, also rode an innovative product/solution to significant growth in its 2012 video surveillance sales (over a 50 percent sales increase from 2011 with dozens of large and nationally known clients added), reports Dan Lazuta, director, sales and marketing, Acuity-vct. He anticipates a similar increase in 2013.
“Acuity-vct has developed and deployed a proactive surveillance system created for the deployment of the Acuity-vct video analytics solution within one of our key market segments — museums and cultural properties. This system leverages our own analytics technology to protect irreplaceable artwork and objects currently on display at many museums nationally, including The Butler Institute of American Art.” (Read more about the project in Technology @ Work on page 83.)
The Cloud & Beyond
“We’re also expecting cloud-based services to make further in-roads in 2013. The adoption rate will gradually pick up as more dealers and integrators realize cloud-based services, such as hosted video, can generate new revenue streams and make operations more efficient for end users,” Honeywell’s Ryerson says.
Hosted video has been one of the most talked about “next big thing” technology trends for the past couple of years, Axis’ Nilsson recalls. “In 2013 we do expect the hosted-channels-per-month figure to climb sharply as more and more integrators better understand how to deploy and sell this type of solution,” Nilsson predicts.
Jay Kenny, vice president of Marketing, Alarm.com, Vienna, Va., also expects to see Video-as-a-Service (VaaS) continue to gain traction in 2013.
“There are several contributing factors that will help stimulate the adoption of these services. First is the increasing capabilities and affordability offered. And cloud services that enable consumers to store video remotely keep customers from absorbing the costs of local storage devices. So a lower upfront cost is making it easier to deliver to a broader market and interactive services are increasing the value end users see in the service,” Kenny explains.
The acceptance of cloud services and the further development of new and innovative offerings by traditional surveillance manufacturers has created the perfect storm for success if you know how and where to focus your efforts, Hile shares. The trick to growth is to continue to focus on the return on investment (ROI) aspects of video surveillance, he says.
His company has reduced the number of focus markets within the organization. “It has helped us understand customer requirements better and at the same time, has enabled our business development/sales professionals to further hone their skills to sell ROI instead of just cameras,” Hile adds.
Acs shares that American Integrated Security Group (AISG) has a renewed focus on hosted and managed video and access control services in 2013. “This not only helps our clients with tight budgets, but assists AISG with recurring monthly revenue (RMR) streams,” he says.
The focus on RMR is going up, as the IT business philosophy of lower equipment costs exchanged for higher service costs takes further hold. So, as IT eyes the industry’s revenue potential, it also infuses new ways to increase existing revenue.
It is just another reason that, unlike many other industries, by all accounts the video surveillance market will continue to “show the money” in 2013.
Video Surveillance Market Weathers the Storm
Like most markets, the video surveillance equipment market has not been immune to global economic problems. While market growth was lower than expected in 2012 spending on video surveillance equipment remained resilient. Overall revenue growth of more than 11 percent is still expected when final 2012 figures are tallied — down a couple of percentage points from the previous outlook, but a rate that many other markets would envy, IMS Research estimates.
The global picture disguises some differences in market performance among regions. The Americas grew slightly more in 2012 than predicted, with Asia estimated to have grown in line with previous forecasts, and expansion in the Europe-Middle East (EMEA) expanding below projections. Part of the reason for lower growth in EMEA is that customers are putting off spending on surveillance equipment until the economic environment clears. The region also has been hit by the falling value of the euro, increasing against the U.S. dollar by almost 10 percent between the beginning of 2011 and the third quarter of 2012.
Looking at the year ahead, IMS Research expects the video surveillance industry to continue its transition from analog to network video surveillance — and from standard resolution to megapixel resolution. In the Americas, megapixel cameras are predicted in 2013 to account for two-thirds of all network video surveillance cameras. Even so, there is a limit to the number of megapixels required for mass-market applications, and the main areas of advancement in 2013 will lie in technology developments and camera features designed to improve image quality.
While video analytics, wireless streaming and the private cloud are trends pushing the envelope in the physical security space, the network video surveillance market is also transitioning to a less complex product offering, designed to penetrate lower camera-count projects. Ease of installation will be a key requirement for the network video surveillance market to win business in what traditionally has been an analog domain.
Finally, the influence of the IT manager, as well as the role of IT integrators and distributors, is predicted to increase over the next couple of years. The success of IP-based video surveillance equipment has attracted IT distributors to a market that allows them to reduce their reliance on traditional IT markets, and to benefit from the higher margins currently available in the physical security industry. IT integrators can see an opportunity to leverage their networking skills base toward driving fresh revenue in a new market. — Contributed by IMS Research, part of IHS Inc. Look for insight from IMS Research analysts in all four of this year’s State of the Market articles. For more information or full research reports, visit www.imsresearch.com.
NVR and DVR spending was expected to increase 58% by SDM subscribers.
Source: SDM’s 2013 Industry Forecast Study
Big Video Data: 2013
The term “big data” is quickly becoming the most abused IT phrase since “cloud computing.” Lately, it seems any database too big to fit on a thumb drive is now christened “big data.”
That said, video content analysis is one area of physical security informatics that can honestly boast the immense quantities of unstructured, real-time data that are characteristic of true big data applications. The size of camera data streams is growing by megapixel leaps and HD bounds, while deployment rises exponentially, and the myriad permutations of observed scenes are as countless as the variety of human activity itself. The result is mountains of data with widely varying characteristics. This is a perfect problem for big data to solve.
But what can we accomplish with big data techniques, and how is this different from other types of video analytics? The simple answer is that traditional “edge” analytics and big data video content analysis are complementary. They solve different problems. Edge analytics can answer: What happened in front of this camera? But big data answers the question: What happened across a whole population of cameras?
The state of the market today is that most big data video content analysis — at least from a technology perspective — is happening outside of the security industry. So, well-informed security buyers will probably come across these solutions from the IT channel before they see them from their security integrator. This echoes a growing trend among hosted video start-ups who sell directly to end users, subcontract the camera and network installation to an IT company, and bypass the security channel entirely. If security integrators continue to stick with the usual in-channel product choices delivered by security manufacturers, look for this trend to gain an even bigger foothold.
Finally, given that most big data offerings — including video content analysis — are available as cloud services that require no customer deployment, but lots of domain customization, we are likely to see more direct, cooperative relationships between end users and cloud service providers. — By Steve Van Till, president and CEO, Brivo Systems, a wholly owned subsidiary of The Duchossois Group, a privately held holding company, headquartered in Elmhurst, Ill., which owns AMX, The Chamberlain Group and Milestone AV Technologies.
Big Data is growing at 31.7 percent a year and is expected to grow to $23.8 billion in 2016
Research by IDC
33% of SDM subscribers offer hosted (cloud-based) video storage/viewing. Source: SDM’s 2013 Industry Forecast Study
58% of SDM subscribers offer remote video monitoring.
Source: SDM’s 2013 Industry Forecast Study