Video analytics manufacturer, Vidient, has gone out of business. This is the first prominent, well funded video analytics company to do so. [The last major analytics event was DvTel acquiring ioimage in January 2010.]

According to an interview with Vidient's CEO, while 2010 revenue was up sharply over 2009, Vidient was unable to secure additional funding. The company reports that a sale fell through at the last moment.

Vidient has a 3rd party broker who will coordinate a sale of the technology over the next few months. The goal of this includes providing support for existing Vidient customers.

[UPDATE: April 2011: Vidient's technology has been sold to Agilent.]

Vidient has focused on high end applications mostly in critical infrastructure and transportation. As we examined in June 2009, Vidient had shifted to a full services approach where they directly optimized and commissioned large, mission critical systems. We believe this was a solid approach to overcome performance issues common in video analytic projects.

Vidient's reported customer list includes: Amtrak, Los Angeles Metro, Montreal Metro, St. Louis Metro, US Departments of State, Navy, Homeland Security, etc.

Funding and Investor Interest

After being spun out of NEC in 2003, Vidient raised approximately $30 Million in VC funding. This is significantly above average for video analytics companies only topped by investments in 3VR, BRS Labs and Object Video. [See our Video Surveillance investment directory for details.]

We are not surprised about the difficulty in raising funds. We have weekly calls with top investment firms and the appetite for video analytics investments is quite low. This undoubtedly relates to disappointing market adoption and challenges hitting revenue targets that tens of millions in funding brings.

What Does this Mean for the Video Analytics Market?

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We think this is an important sign of the challenges that video analytics now face. With easy money gone after 2008 and widespread market disappointment in the technology, video analytics manufacturers will need to become cash flow positive as soon as possible. Additionally, video analytic customers should closely evaluate the financial sustainability of their providers.

One important structural difference of Vidient relative to other analytics providers is that they did not go into the recorder or camera business (e.g., VideoIQ and Cernium into cameras, 3VR and Aimetis into recorders, etc.). In this respect, Vidient's product approach of concentrating on selling analytics only is closer to BRS Labs or Object Video. We are not certain which approach will be best in the long run but we do see this as an important go to market distinction.

[UPDATE: April 2011: Vidient's technology has been sold to Agilent.]