While 2020 affected the confidence of some in the video market, professionals remain optimistic going into 2021, with the increased adoption of new, more advanced technologies, and a potential end to the coronavirus pandemic in sight.
“We’re going to rock  — this year is going to be great,” says Andrew Elvish, vice president of marketing, Genetec, Montreal. “I think a lot of the turbulence of 2020 is probably behind us. We still have a way to go before things are back to normal — likely more than a year to go. But I think the fact that we have vaccines, stimulus is being released — this is a great time.”
In the 2021 SDM Industry Forecast, conducted in the fall of 2020, 60 percent of those in the video surveillance sector rated the market as very good or excellent. Twenty-six percent rate the market as good, and 13 percent believe the market to be either poor or fair. In the 2020 report, 71 percent of video surveillance professionals said the market was excellent or very good, 20 percent said it was good and 9 percent considered the market to be fair or poor.
But while confidence was down slightly compared to the previous year before, the video sector had the highest confidence in the industry in 2020, according to the Industry Forecast.
“2020 was an unusual year for us,” says John Nemerofsky, chief operating officer of Sage Integration, Kent, Ohio, featured on this month’s cover. “It didn’t flow as we thought it would with the COVID-19 crisis, but we were up about 8 percent year over year, and our video revenues were about 49 percent of our total sales.”
Stone Security, SDM’s 2020 Integrator of the Year, also reported having an unusual year.
“Overall we were relatively flat, which is abnormal for us,” says Aaron Simpson, co-founder, president and chief technology officer of Stone Security, Salt Lake City, Utah. “Stone Security has grown anywhere from 30 to 50 percent year over year for the last ten years; we were off to a really great start in 2020, and then we really kind of flattened off. It’s definitely flatter than we had wanted, but still probably at 10 percent growth for the year.”
Video surveillance systems are the most commonly offered security product or service, according to the 2021 Industry Forecast, with 78 percent of professionals currently offering video surveillance, 8 percent planning to offer video in the next one to two years, 5 percent planning to offer it in the next three to five years, and only 8 percent not planning to offer video at all.
What Happened in 2020?
Everyone in the security industry can likely agree that COVID-19 had the greatest impact on 2020. However, all of the impacts may not have been bad.
“Ironically, the pandemic hindered and drove business simultaneously,” says Bill Brennan, president of Panasonic i-PRO, Rolling Meadows, Ill. “It hindered business due to mandated lockdowns of non-essential businesses, which limited systems integrators’ and installing dealers’ access into customers’ facilities. Many end users also suffered financially, which led to a freeze on scheduled and impending projects.
“Yet at the same time, many businesses and operations looked to implement new solutions to help them maintain compliance with new health and safety measures, so they could operate at some limited capacity and prepare for workers to eventually return to work and school. This past year presented a true dichotomy relative to sales that is unlike any other time in our history.”
While buildings were empty, some companies took the opportunity to update and modernize their video surveillance systems.
“A lot of end users took advantage of this year of less foot traffic to do a lot of capital investments and upgrades to their security systems,” Elvish says. “We also saw a lot of attention being put into modernizing physical security systems — this year allowed security professionals to say this is our chance to really make that leap.”
Elvish adds that more sophisticated end user spaces, such as oil and gas, property management, retail and airports, as well as data centers and tech companies, really drove business this year with the updates they made to video systems.
Jeff Burgess, chief executive officer of BCD International, Buffalo Grove, Ill., says manufacturers’ ability to build and ship solutions was a key factor throughout the pandemic. He credits his supply chain team — which was able to decrease shipping times from eight days in March to under four days in November — for the company’s increase in revenue in 2020.
“We were hindered somewhat by installation facilities being closed, but we started to see an uptick in projects reopening for installations by Q3 2020,” Burgess said.
Tim Palmquist, vice president, Americas, Milestone Systems, Lake Oswego, Ore., believes the video market was hindered by two things in 2020: “The first was the installers and system integrators not having access to end user facilities — this was a new twist we had not seen before,” Palmquist says. “The other was a reallocation of end users’ budgets to facilitate alternative needs. For example, in the education vertical, many schools turned to remote learning versus focusing on the physical protection of their facilities. They shifted their budgets in response to the impacts of COVID-19 and restricted access to their schools.”
Customers’ demands for more and more cameras also drove business in 2020.
“It’s always shocking, but there’s a constant demand for more [cameras], especially in these days when people are away from their facilities,” Simpson says. “A lot of our customers also want more proactive solutions and notifications, so their cameras are more of an asset.”
The improvement in analytics capabilities brought a great deal of attention to the video market last year, as many companies relied on them to safely remain open.
“It almost goes without saying that while the market as a whole suffered, like most industries, from the effects of the COVID-19 pandemic, the opportunities presented by video analytics and smart cameras became vital to resuming business,” says Fabio Marti, vice president of marketing, Security & Safety Things, Munich, Germany. “The ability to run AI-enabled analytics directly on embedded devices to solve problems at the edge enabled many to get back to work in a safe and secure manner, using occupancy management technologies, upholding social distancing guidelines and, in some cases, deploying temperature detection.”
Some companies looked to managed services to boost sales in a tough year — an idea that organizations like PSA have been stressing for years.
“We’ve made a good pivot and are now offering a lot of options around video hosting, interactive video solutions, health monitoring, password monitoring and maintenance,” Nemerofsky says.
According to the SDM Industry Forecast, 62 percent of security professionals currently offer remote video monitoring, and 56 percent offer Video Surveillance as a Service (VSaaS). At least three in five companies that are not currently offering managed/cloud-based services expect to begin offering remote video monitoring and/or VSaaS in the next 12 months.
“The pandemic has disrupted so much of our lives, but for systems integrators, the disruption has been around the normal cycle of deployments and the uncertainty influencing the buyer’s cycle,” says Srinath Kalluri, CEO of Oyla, San Carlos, Calif. “This has made it harder for systems integrators to count on equipment installs and has forced them to look for other ways to meet sales and revenue goals, like adopting a more service-based mindset.”
Jeremy White, founder of Pro-Vigil, San Antonio, Texas, agrees that the recent economy has led to an increase in the adoption of managed services.
“In a down economy, or as unemployment rates rise, companies look for ways to reduce expenses without scaling back their security strategy,” White says. “It’s the perfect scenario for VSaaS. For example, a commercial property management company might be dealing with more vacancies than ever before. They need to protect these buildings, but they just don’t have the revenue coming in. Video monitoring is a strong play there.”
The security needs of the fast-growing Cannabis industry also helped integrators through 2020.
“The largest trend for us here in Massachusetts is the quickly growing Marijuana market,” says Paul Verruto, sales manager, Wayne Alarm, Lynn, Mass. “This is providing a great deal of opportunity in the enterprise surveillance market.”
Jason Burrows, regional sales director, Western U.S., IDIS America, Coppell, Texas, says, “Our high-end retail and hospitality customers were hit particularly hard by COVID-19 lockdowns, which inevitably saw a drop off in new projects and upgrades. However, our focus on the thriving Cannabis sector has continued to pay dividends; we saw a spike in Cannabis sales during the first March lockdown in California as many dispensaries are now viewed as essential retail.”
Besides the coronavirus pandemic, 2020 will likely be remembered by those in the video sector as a year in which technology improved at a record pace. And while many of these new technologies were developed with COVID-19 in mind, the advancements made will continue to drive innovation in video surveillance for years to come.
“From a technology perspective, we see open-platform integration continuing to stimulate true convergence supported by more advanced AI-driven edge devices and software platforms, including intelligent analytics,” Brennan says. “From an application perspective, compliance and risk mitigation are now more top-of-mind than before because of the pandemic, which further compounds liabilities on many different levels. All these factors will combine to help drive a strong recovery in the physical security market.”
According to SDM’s 2021 Industry Forecast, 34 percent of security professionals consider the video analytics market to be very good or excellent; 33 percent consider it to be good; and 33 percent consider the market to be fair or poor.
“Intelligent video analytics powered by deep learning are positioned to enjoy steady growth in 2021,” Burrows says. “As computational power has increased, they’ve become increasingly easier to deploy and use, as well as more cost-effective and accurate. And users are choosing from a variety of options to harness the power of AI and its benefits. Edge-based cameras are a popular option because users can benefit from metadata even without applying analytics rules to speed up investigations, while processing analytics on the edge results in reduced bandwidth usage.”
Video analytics can be useful when working with customers with lower budgets — a factor that becomes increasingly important amid shrinking security budgets, says Bill Fitzhenry, chief sales officer, Bastion Security, Portland, Ore.
“We leverage technology to cost-effectively manage risk and solve real business issues,” Fitzhenry says. “For this reason, we’re technology and manufacturer agnostic. That said, AI-powered video analytics and hosted cloud technologies have been incredibly useful in extending the scope of protection we’re able to offer.”
Ed Pedersen, vice president of sales, security integrator and distribution channels, Bosch Building Technologies, Fairport, N.Y., says the possibilities with video analytics are virtually endless.
“Deep learning-powered video analytics will continue to gain adoption both via devices with embedded analytics and through standalone analytics software licenses,” Pedersen says. “The development of AI and deep learning, and the impact that this technology will have, will drive growth and technological development for the video surveillance industry. The ability to convert unstructured video data into meaningful insights will move the video surveillance industry into the IoT world.”
The introduction of more processing power at the edge is also making these next-generation analytics more scalable and easier to deploy, according to Pedersen. This, coupled with the open architecture of new hardware platforms, is broadening the base of developers and enabling far more diversity in the tasks that technology can perform.
And, as video cameras collect more and more data, the demand for AI and analytics will continue to grow.
“As the security needs of users continue to change and grow, this means that security operators are faced with the obstacle of keeping up with managing an increased amount of data and insights; on top of that, most people have shorter attention spans that decrease over time,” says Alex Asnovich, head of global marketing, video security and analytics, Motorola Solutions, Chicago. “However, AI can help to overcome these challenges as it can analyze a significant amount of video data more efficiently and effectively than humans ever could. It is designed to bring the most important events and insight to users’ attention, freeing them up to do what they do best, which is make critical decisions.”
Pro-Vigil deployed AI across its entire customer base in August of 2020; and in 2021, White says the company will be able to sort through all of the data being collected to help customers make better business decisions.
“2021 will be a year of moving from proactive to predictive,” White says. “Traditionally, security has been reactive — someone breaks in, you go back and watch the tape to see what went wrong. Now, with AI systems learning from the enormous amount of data generated from security cameras, Pro-Vigil is moving into a new paradigm of predictive security, where weather conditions, time of day and the direction someone is walking, for example, could help predict an attempted crime before it ever happens.”
Government-funded projects will likely be the largest vertical application for video analytics, Pedersen says, due to city surveillance projects. The development of business intelligence and safety applications will also generate a considerable increase in use cases for this technology, as commercial end users focus on analytics for non-security applications.
“Proactively managing risk is now more important than ever for end users,” Fitzhenry says. “Whether it’s growing transient activity, increasing property crime or more general concerns (especially in urban environments), stopping criminal activity before the action occurs is critical.”
Brad McMullen, general manager, 3xLOGIC, Fishers, Ind., is one of many security professionals that predicts the cloud will help the video market rebound in 2021.
“Cloud-managed video systems are being embraced, and with a lower cost of entry for these systems, customers can determine how they want to manage their video solutions — on-premise, cloud or hybrid solutions,” McMullen says. “These solutions enable customers to scale their video solutions as needed, add or remove storage space when required, add features and benefits on-demand and pay for exactly what you use.”
Nemerofsky says that while he initially saw success with the cloud in markets such as senior living and property management, he now frequently sees the cloud in use at corporate headquarters as well, especially with so many employees working from home during the pandemic.
“Cloud solutions have been tossed around and talked about for a while now,” says Miguel Lazatin, senior director of marketing, Hanwha Techwin America, Teaneck, N.J. “I think now it’s becoming more of a reality because the obstacles and the cost can be more easily overcome than maybe several years ago.”
Megapixels, Audio & More
Analytics and the cloud aren’t the only technologies on video professionals’ radars — higher camera megapixels, IP intercoms and audio are also affecting the way integrators sell and install surveillance systems.
“The product mix is ever-changing — when we talk about cameras, 1080P used to be the standard resolution, but now 4K is becoming the norm,” White says. “We have to make sure that we’re staying nimble and flexible in order to deploy technologies that can adapt and grow as the industry rapidly evolves.”
Nemerofsky says that more customers are demanding cameras with higher megapixels, which means they get better views with even fewer cameras.
IP intercoms and audio solutions are also in greater demand than they were a year ago, according to Fredrik Nilsson, vice president, Americas, Axis Communications, Chelmsford, Mass.
“Two of the most promising technologies right now include IP intercoms and IP audio solutions,” Nilsson says. “Today’s market is analogous to the IP video market a decade ago. Great opportunity exists for new applications and installations, as well as the prospect of converting the abundance of existing analog systems.
“As users realize how exponentially powerful their network security system can be by combining intelligent audio and intercom with other technologies like IP video, access control and analytics, adoption will accelerate.”
And while it will be exciting to see how video continues to grow in the next few years, McMullen cautions integrators when considering all of these new and emerging technologies.
“With new technology and solutions launching monthly, integrators need to stay educated on the benefits and challenges of new solutions, and they must understand which solutions are proven and if they truly solve the problems their customers are looking to solve,” he says.
What to Expect in 2021
As of late January, even though new year had begun, most of those in the video market were still unsure of what exactly to expect in 2021.
“No one knows how COVID-19 will impact us in 2021 or how long the vaccination process will take to finally end the pandemic — obviously, the sooner it ends, the better for business,” White says. “We’re also watching how new entries into our industry shape the market moving forward. While competition is a challenge, it’s also an opportunity because it will educate decision makers on the solutions available.”
Frank ‘Skip’ Haight, vice president of marketing, Communication Networks (ComNet), Danbury, Conn., warns of possible supply chain issues affecting the market in 2021.
“In the manufacturing sector, the availability of components is going to be an issue; and in the supply chain, getting those components that are important to the manufacturer of products has been affected,” Haight says. “The components of our products come from manufacturers globally — if any of those factories were shut down for any period of time, that affects delivery and production on our end.”
Because of this, Haight recommends security integrators start the purchase process for projects as early as possible.
Burgess of BCD International also predicts supply chain issues will affect the way integrators do business in the coming year.
“Integrators are likely going to refocus and reemphasize their product lines more than we have ever seen,” Burgess says. “Genetec integrators will not carry other lines, Avigilon and Milestone integrators will do the same. Their challenge will be how to widen their existing product offerings while expanding their touchpoints within their existing accounts and finding new customers to deliver their solution.”
As the technologies in the video market continue to evolve, so will the supply chain, and it’s up to security systems integrators to determine where they will fit.
“Being informed and educated on how to add value throughout the chain [will be a challenge for integrators this year],” Lazatin says. “For integrators, it’s about how they adapt and recalibrate their business and figure out in the face of things like cloud solutions, what their role is within that value chain. I think it’s imperative for resellers to maybe not think about what made them successful in the past, but the future of this industry and what technology is driving it, and understanding how to add value and be a consultant to end users.”
While the first quarter or half of 2021 may start out slow, manufacturers and integrators alike are expecting business to pick up as coronavirus vaccines are more widely distributed and facilities start to reopen.
“We are forecasting second half 2021 revenues to be up 166 percent greater than the first half,” Burgess says. “There are still a lot of moving parts on the vaccine distribution and the potential of additional strains and spikes as we are seeing globally, which could cause the return to closing facilities again, repeating delayed installation. We expect 2021 to be similar as to how we started 2020, again riding the momentum of the last four months of the year. Hopefully, this time we will be able to continue to build from that foundation the balance of the entire year.”
Stone Security, like other integrators, took advantage of the slowdown in business last year to improve internal operations and processes, preparing them to take on a massive backlog of projects.
“We’ve seen no canceled projects, but a lot put on hold, so the biggest opportunity is making sure we’re back in front of the customer and getting those flowing again,” Simpson says. “That backlog is just a floodgate ready to burst. The biggest challenge has got to be the concern of how quickly things will open up, and how quickly customers will be receiving visitors. The unknown there is our biggest challenge right now.”
Axis has also been preparing for a pent-up demand of video products, and believes that a variety of factors will lead to a successful 2021.
“A pent-up demand, the need to kick start stalled projects and a business community that’s eager to get back to normal will help the industry hit the ground running as the pandemic subsides and the economy fully reopens,” Nilsson says. “As businesses look to regain ground lost in 2020, a healthy balance sheet will be more important than ever. Business owners will become more discerning as they look for investments with a solid return — and that means getting the most out of their network security technology. Our industry is poised to respond with proven solutions that help meet health and safety requirements, improve security and enhance business operations.”