Is Hosted Video Really Dead?

IPVM's original post on hosted video being dead, but is it really dead?
A recent article in Security Systems News - At ASG Security, Hosted Video Is Hot
I'M EXCITED BY THIS.
Is this feasible? How long before return on investment is made? What kind of recourse do you have if the business goes bankrupt, closes its doors? Cameras are stolen, how would you recoup that expense?

IMO, AVHS is never going to make real money for folks in anything resembling its current incarnation. Megapixel cameras generate data faster than the typical Internet upstream pipe, and most sites have multiple cameras.

"The cloud" has never been (and likely never will be) a cheap way to store gobs of data, especially ever-changing data. It can be a cost-effective convienience to store large amounts of relatively static data (eg: Dropbox. It's also worth noting that part of Dropbox's technology is extensing file de-dupe detection so they don't have to move multiple copies of identical files).

Hosted video is not a wholesale NVR replacement. It CAN be a great way to take selective video (selected by a person, an algorithm, etc.) and store it remotely and securely, making it easily accessible to a number of clients.

It would be improper to call hosted video "dead", because (IMO) it has not yet been actually "born".

IMO, AVHS is never going to make real money for folks in anything resembling its current incarnation. Megapixel cameras generate data faster than the typical Internet upstream pipe, and most sites have multiple cameras.

In Japan, 100Mb Ethernet service is available to residential and commerical entities for under $100/mo. This type of connectivity will make this a potential option in the future, but you call out the problems as it stands now.

"The cloud" has never been (and likely never will be) a cheap way to store gobs of data, especially ever-changing data. It can be a cost-effective convienience to store large amounts of relatively static data (eg: Dropbox. It's also worth noting that part of Dropbox's technology is extensing file de-dupe detection so they don't have to move multiple copies of identical files).

I have to disagree. Again, we're commenting on a 'now' situation that will rapidly change. 2-5 years and the infrastructure to support large data-sets with significant internal changes (e.g. surveillance video data) will be there. A well-managed 50 camera system could utilize a 100Mb ethernet connection, and with the correct cloud service could be a feasible option. We'll have to see how cloud services start competing, but I expect the same as always: commodization through open protocols and standards creates a downward price-pressure until it becomes viable to a large segement of the market.

Another thing to consider, albeit a digression to this conversation, are private clouds. Genetec is about to deliver on this in one facet with Stratocast, and it will be interesting to see how the value is delivered.

Dwayne, thanks for sharing this. A few things to keep in mind when considering these results:

  • ASG is bundling this with their intrusion offering which is mature and strong in the marketplace. As we have seen with Alarm.com, the best possibility for hosted video is combining it with an existing alarm business.
  • ASG is one of the biggest alarm / security companies in the US, reporting over $100 million for 2012 revenue.
  • ASG is evidently selling this at a fairly low rate. Their charge of $20 per month includes the cameras/hardware when many other providers were trying to sell it at $20 per month just for the service / hardware excluded.

With that noted, ASG says they sold 1,000 channels in the first 6 months. This sounds pretty good, though at their size, this means ~250 total systems, which I doubt is a lot for them.

What is really troubling is the second part of that quote, "We beat everyone else out and were named Axis’ AVHS partner of the year." With 1,000 channels, they beat everyone else out? That does not say a lot about all the other big name Axis partners.

I can believe ASG is doing this and they can continue to generate modest incremental business. On the other hand, this is $80 per month for a 4 camera system or nearly $3,000 over a 3 year period. That's quite expensive for a DVR replacement.

As for my Killing Hosted Video post, the point is not that hosted video is particularly 'alive' or 'dead' today. The issue is that edge based solutions combined with managed access will cripple whatever limited business case hosted video has.

Thanks again for bringing this up and let me know if you have feedback. Btw, Dwayne, you originally copied SSN's full article. I removed it and inserted a prominent link in its place. It's important to respect SSN's copyright to their work.

John thanks for the editing of the article. I respect will and take your reply to heart on this post.

I'm going to take a wait and see approach. I personal want hosted video to take off. I like the monthly income from the hosting fee. ASG is not really storing to cloud if you read the artical their selling the customer a "local storage 2TB NAS". Customer once they can watch their business remotely will do anything to keep this service. Is our place to tell them otherwise. The business model that ASG uses is the same I want to introduce to my clients, just can't get past the upfront cost, can't see the takening that much exposer for the cost of the equipment.

Dwayne, good eye on the local storage part though where did you see the 2TB reference? All I could find was, "The package includes Axis IP cameras (or encoders), cloud storage provided by Secure-I, and local onsite storage (NAS) provided by Iomega."

That said, I am with you about fronting the equipment cost. The cameras are $200 each, the NAS is another ~$400 so that's $1200 expense up front. At $80 per month, it takes 15 months to pay back just the equipment.

4th paragraph from the bottom "put 2 terabytes of storage".........

Good eye again, so it's not even really hosted video, maybe hybrid hosted at best.

Better title, "Hosted video is hot, if you put a recorder on site, fund the equipment yourself and consider 250 systems from the #1 AVHS Partner Hot"

Btw, if you want a recurring revenue service, I think remote monitoring of video analytics has more potential.

Cloud storage. Sounds dreamy, hey what? But every cloud does not have a silver lining. Read this: Is Your Cloud Drive Really Private? Not According to Fine Print

Seth, the problem is that upstream network bandwidth has grown very slowly. It's been a decade and most places in the US has not seen much progress. And even in those areas that do have fiber to the curb or home, there are still tiny bandwidth caps relative to the needs of surveillance.

Can you explain how things 'will rapidly change' with regards to upstream bandwidth?

I don't think there's a major TECHNICAL reason why upstream speed SHOULDN'T be able to improve dramatically. In the past it's been largely a limitation of the asynchronous consumer technologies (remember what the A in ADSL stands for), but newer systems have improved on this and I believe the limitations these days are largely imposed, specifically to prevent (or at least limit) more people from running their own hosting and saturating networks with file sharing.

For most people, the real bugaboo will continue to be bandwidth caps, I expect: sure you COULD transfer a few terabytes a month over your highspeed connection... but once you get past a couple hundred gigs your provider will either cut you off, slow you WAY down, or start collecting limbs. Oh, or they'll be happy to sell you a bigger service plan...

The one exception I've seen to this is Google Fiber - their $70/mo plan boasts "Up to one gigabit upload & download • No data caps • 1 year contract • $300 waived construction fee • Network Box included • 1TB Google Drive • $70/mo + taxes & fees." But according to their site, this is still limited to part of the Kansas City area.

BTW, I think ASG needs to update their copy - shouldn't that read, "The package includes Axis IP cameras (or encoders), cloud storage provided by Secure-I, and local onsite storage (NAS) provided by LenovoEMC."?

Matt, there are real technical barriers to increasing upstream bandwidth. It is a direct result of the last mile infrastructure that almost always use copper wire or coaxial cable to the home/business. You can eke out some gains with ADSL or VDSL, etc. but the upstream limitations are especially severe and fundamental.

The answer, as you share, is fiber but the economics of fiber to the curb or home has always been brutal. There is no economies of scale with such deployments. Carriers must get a very large percentge of homes to buy and commit for a long time to recoup their investments. Sure, Google can subsidize this as an experiment but this is why FTTH/FTTC has been such slow going even though it's been pitched and hyped as the next big thing for 15+ years.

I didn't say there weren't still technical barriers... but I don't believe they're limiting the actual bandwidth that's POSSIBLE anymore so much as the those speeds are being artificially limited by providers. And yes, granted, this will vary greatly depending on the area - a big problem is, providers give the same service plans in a variety of areas that have WIDE ranges of what's technically possible. Someone in an area where the technology could allow them 50Mb uploads is still stuck with the same service plans as those who live in outlying areas where they couldn't get over 5Mb. While pretty much all providers do have several service tiers, I don't know if you'll find any that have different offerings depending on your location.

Part of it may just be that people are happy with what they have... or more accurately, will simply accept what they have, and so there's no rush on the providers' part to change things. For example, with the systems in place now, it's TECHNICALLY possible for my cable provider to allow users to pick-and-choose what channels they want with their service... but the only way to actually get certain channels are as part of lineup packages, at a greater cost. I can't just order two sports channels I want for a couple bucks each per month; I have to pay $10/mo. for a block of a dozen channels. The only reason for this is that they don't get the demand for it - oh sure, there are a couple dozen people on the support forums and whatnot who are very vocal about, but there are tens of thousands of other subscribers who will simply accept the offerings they're given and keep paying their bills every month, so there's no incentive to change anything.

Matt, the technical barriers are absolutely limiting the actual bandwidth that's possible. Copper or coax wiring, often decades old, running thousands of feet poses real limitations. Plus, the limitations are compounded on the upstream vs downstream side. There is a real technical reason why bandwidth is asymmetric. For telephony lines / DSL, it's because of increased noise from having dozens or hundreds of subscribers transmit upstream. For cable, it's limitations on the upstream channel width and coordination limitations on having many subscribers communicating upstream.

To make major gains on these problems, you have to move fiber much closer, either to the house, curb or within 1,000 feet. And that's expensive and most carriers, especially outside of very densely populated areas, continue to be highly reluctant to engage in the construction projects necessary to do this.

Your example of picking and choosing channels is irrelevant. That's simply a packaging issue of content that is already being transmitted continuously. Upstream bandwidth is fundamentally different. It is unique for each house and it needs to be aggregated going upstream from many houses in a region.

Btw, it's very common for carriers to market their max amounts of bandwidth and then tell users, "Sorry, in your area, we can only do half or a quarter of that, etc."

One other thing to add about caps because it's important to understand the long term barriers for hosted video. Caps aren't simply ways to gouge high volume users, they are important safety mechanisms to stop users from overwhelming last mile connections.

Even when a carrier markets 50Mb/s or 100Mb/s bandwidth, that is typcially shared amongst a number of users. Carriers presume that only a certain percentage will consume bandwidth at any given time and therefore can over guarantee what they offer. For example, they may sell 50Mb/s per house to 20 houses on a local node but they wouldn't have anything close to 1000Mb/s available on the local link. They may only have a fraction of that total (perhaps 100Mb/s or 200Mb/s total) available.

The problem with constant bandwidth hogs (like hosted video or running a web server at your house) is that they wreck this economic model. The carriers need to defend against this by imposing caps to effectively punish anyone who uses too much.

This model will not change until one has a direct fiber connection to each user, which for most is far far into the future.

Carriers presume that only a certain percentage will consume bandwidth at any given time and therefore can over guarantee what they offer.

I was going to post some of the things you already mentioned, but this is a big one worth calling out. Generally speaking, it's not uncommon to sell infrastructure that is 1000% oversubscribed. This is because most traffic is bursty and non-constant. The megabits-per-dollar contracts all take this into consideration. Wholesale dedicated bandwidth is still around $10/Mb/month. Meaning that $10/mo. can get you (at the wholesale level, meaning buying in bulk) a 1Mbps connection that is truly and completely unlimited. Now scale that up to what it would cost to support a few megapixel cameras, and then add in 50% for basic markup and see how the cloud looks as an NVR.

From Dwayne: "I'm going to take a wait and see approach. I personal want hosted video to take off. I like the monthly income from the hosting fee."

I find it interesting that the same basic concept can be repackaged every few years and presented as if it is a 'gamechanger' now - even though the 'game' remains largely the same (bandwidth limitations).

Hosted was an 'up and comer' years ago that never came.... typical surveillance integrators either couldn't or wouldn't sell it - primarily (imo) because the typical surveillance integrator salesperson saw no value to themselves in selling this option.

As alarm guys are quite familiar with the opex-based residual sales methodology, it is hardly surprising that VSaaS providers have shifted their focus to this new reseller target. As the newer DIY alarm offerings are impacting revenue streams, it makes alarm guys more inclined to look for alternative revenue sources. They 'want hosted video to take off' and 'like the monthly income from the hosted fee'.

Too bad for them that telcos/ISPs like Verizon, AT&T and Comcast have already laid the groundwork to offer similar services as a value-add to their large customer bases. Largely the same target market for integrator-sold hosted surveillance.

Here's ASG's video pitch for hosted video:

Lots of funny claims inside. One, in particular, is about eliminating problems with DVRs breaking, except now they replaced it with an onsite low end NAS. Oh well.

I think for it to take off, it has to be from an ISP (example - Time Warner Intelligent home)

and must be bundled with other services (security, automation, etc). The selling of "megapixel" resolution has really cranked up our industry. So much that we have become experts with the math involved with providing a camera solution for every situation (PPF, IR, WDR, Lens, Resolution). If hosted video takes us back to the CIF/2CIF resolution days, I am really not that interested.

We did bring on Brivo as a line, and I was thinking that you sell the card access with the video (video alone is not a market). Makes sense - especially for the 1-2 door situation and includes forensic backup. We are not door knockers, as you would have to be to sell this solution. One thing I did realize is that you really do not know what the customer has for web connectivity. Our recent rollout of Total Connect with video and automation is much more successful.

Hosted video will be and is for the "self-installer" and not for the security/network integrator.

Hi All,

Another way to learn about the progress of hosted video is to track the downloads at app /play store:

In both EyeSpyFX from Northern Ireland is indicated as the application provider.

To summarize, in both the number of download is small.

It will be nice if IPVM can review that say every ½ a year ( I do for the last 2 years).

I am Curious, What do you guys think of the Alarm.com video solution as compaired to DropCam? The both seem to have some big user numbers.

Alarm.com and Dropcam are different ends of the spectrum (in terms of what their solutions do and how they market it).

Alarm.com's VSaaS is an add on to an intrusion monitoring service. Dropcam is an individual product marketed primarily through Amazon (and Google ads).

I think both are better positioned than Axis AVHS offerings as one benefits from a low cost add to existing services and the other is a relatively inexpensive, well reviewed consumer offering online.

Down here we're getting a new nationwide broadband network -except some of those really remote locations like the ones you saw in mad max!

The Aussie government has an initiative for fiber directly to the home and business (www.nbn.gov.au)

"Plans start from as little as $A30 a month for a 12 megabits per second (Mbps) download speed and one Mbps upload service with a 15 gigabyte (GB) monthly data allowance.

Other service providers are charging around $A55 a month for a 25 Mbps download service and a 50 GB a month data allowance.

If you want even higher speeds and more data, there are plans of up to 100 Mbps download and 40 Mbps upload for reasonable prices."

So with 40mbs upload speed video hosting here is looking forward to an optimistic future!

Don't worry I'm sure this cost us tax payers a fortune.... fiber to the home and biz for 22.6 million people on a chunk of land almost as big as the USA!

The only thing I wanted to add regarding this topic, is that there were comments earlier about cloud storage not being cheap, and I didnt see anyone address that, but cloud storage is actually insanely cheap. My boss found 3-4 name brand cloud storage options that charged $0 or pennies more than that per gigabyte uploaded, the majority of that cost is for downloading that data. If you can imagine that the users of these smaller cloud hosted systems are really going to review video when there is a known incident or issue (3-4 times per month?), it really isnt the storage that is cost prohibitive.

I totally agree that to-the-premise bandwidth (in the US) is the source of the problem, but storage cost definitely isnt.

I totally agree that to-the-premise bandwidth (in the US) is the source of the problem, but storage cost definitely isnt.

Until you actually try to use it for CCTV storage. The majority of those "cheap" storage companies are operating on assumptions similar to the "unlimited" bandwidth plans. They are assuming traditional useage methods, and their business plans allot for very little non-conforming (eg: constant streaming in or out) usages.

Look at the major hosted storage providers (Amazon, et al) and look at how they charge for storage. If you look at any of the actual service contracts underlying current storage OR bandwidth wholesalers, you'll see that all of the public pricing models do not scale to the cloud as a simple NVR replacement. The risk to small businesses is that for a while you'd probably get away with using one of these "cheap" storage providers in that manner, probably just about until the time you started to gain some real headway in your business, and then you would find that no provider would take your account because they'd be losing gobs of money on it.

I see these posts about speculation that somehow this will magically change in the not too distant future, but if you look at the historical costs of what it would take to create a truly viable wide-market storage house for 720p and greater image streams, you'll see that the math is still nowhere near extrapolating out to "affordable".

Syd, the bandwidth you're looking at is great... but the cap, not so much. If you streamed video to your cloud account at the full 1Mbps upstream of the cheapest account, you'd hit your 15GB cap in less than a day and a half (33.333 hours, by my math). And that would be just a single 720p camera on a fairly high compression level.

And I don't know about your providers there, but with most I know of, the data cap is against the sum of up and down traffic... so every YouTube video you watch, every torrent you download, every visit to IPVM.com, is a hit against that 15GB as well.

BK, I'm talking about Amazon storage (and as I said, the other 2-3 major providers are similar). This is not to say they can't/won't change this in the future, but currently Amazon pricing is pretty straight forward.

Sean, Amazon makes most of its money on storage, not transfer. For example:

Use their monthly calculator to get estimates. 1TB (or 1000GB) is ~$90 per month. Even if you hit scale (over 5000TB/month) it is ~$55 per TB per month. Over a year, that's $600+ per TB. That's a lot of money.

Sean -

Those are the data transfer prices, but there are other costs for storage (retention), and also GET/PUT requests:

http://aws.amazon.com/s3/#pricing

A "typical" 1080p camera can generate about 40GB of data per day (~4mbps stream). Figure they use motion-based recording and only record 1/4 of a day (10GB/day), 6 days a week (240GB/month). 4 cameras for a really small site = 960GB/month.

They want 1 month of storage (though feasibly could get by with less, if you're comparing to an NVR this is probably a fair comparison). But, they can get by with reduced redundancy (so, the cheaper storage tier). And, let'ssay you're doing a fair bit of this business, so you're getting pricing in the 500TB tier. That's 960GB * $0.052 = $49.92/month (YOUR cost) just for storage. Of course, we've walloped past most consumer ISP bandwidth caps by now, but let's just assume for a while that's not an issue yet.

Somewhere in there you have to craft a nice web UI for the customer, and maintain that on some servers. You'd probably also have some kinds of features that would result in the customer accessing data from time to time. Let's say though that the site follows one of the common models of "only 5% of video is accessed on average", 960 * 0.05 = 48GB * $.120 = $5.76.

You're at $55/mo. just for the raw cost of the data storage alone. You'd still have additional costs for the rest of the web infrastructure to build this AND you need to mark it up to actually make it "a business". So, $75/mo. is probably a best-case realistic street price for a 4 camera 1080p system giving the user 1 month of storage. In less than a year they're exceeding the costs of an NVR, which probably conservatively has a 4 year life span. You realistically need to account for bandwidth, even though we glossed over that.

I don't see where this works...

I don't know about other cloud storage services, but they're probably similar to Dropbox, where users' files are all analyzed and anything that's duplicated across accounts, only needs to be stored once. For example, if 10,000 people all sync the identical "lolcat.jpg", Dropbox only keeps one copy of it and all users view the same file.

That's a gross over-simplification of how it works, of course; I believe the process is actually done on small chunks of data rather than whole files, but the idea is the same: they USE a lot less space than the sum of what users store. People start loading it up with video data like that, it could cause problems with most business models and potentially result in changes to several services' TOS. "Generic" cloud services could potentially charge a premium for surveillance use, or ban it outright.

Matt -

Yes, Dropbox runs on S3, and the client-side de-dupe checking is a big part of what enables them to run a more cost-effective service for large amounts of storage on S3. By storing pointers/aliases to files, they can give a lot of people access to the same content, without having to move that content up and down multiple times. Dropbox also syncs a lot of your data on your PC, so that every read does not incur a cost.

These things are not really as applicable for cloud NVR storage. The most practical model would require some amount of "local" storage (much like Dropbox uses your PC for local storage), but at that point if you have a dedicated local store/cache, it appears to make more sense to just have that box record everything.

Great discussion, so I wish I had more time to respond and participate. [Required disclosure: I am president of Third Iris, a hybrid edge-cloud solution provider that also manufacturers cameras in the U.S.A. under multiple brands, including VIAAS.]VIAAS (viaas.com) is in the middle of launching two new HD cameras with new service plans, an iOS app, upgraded UI and upgraded infrastructure; preparing for ISC West; and all the fun stuff of growing a business.

We have customers with hundreds of cameras (yes, hundreds per customer), including federally funded customers (i.e. competitive bids). Will public cloud solutions replace solutions with excessively high bandwidth requirements, e.g. casinos? Not in the near-term future. However, didn't Bill Gates believe the desktop would be the primary computing platform for a very longtime? Microsoft has been catching up with Hyper-V, Azure, Office 365, SkyDrive, etc. to respond to a market that evolved much faster than he expected. By the way, well-designed cloud architectures can be deployed in private clouds, e.g. a casino DC or white label (we are already deployed this way).

Cloud solutions provide greater value to many end-users seeking some of the following:

  • Distributed deployments
  • Lower SW maintenance requirements
  • Shift from CAPEX to OPEX
  • Integrated long-term, offsite archiving
  • Variety of additional cloud services, e.g. analytics. Cloud providers should be able to deliver value-added services quicker and cheaper to their serviceable market. This will evolve into one of, if not the, leading value prop for cloud in the surveillance industry. This will influence the direction of hybrid solutions.

Cloud, even hybrid edge-cloud, will continue to be a great value for many end-users.

$600 per TB is significant, but compared to the $2000 for bandwidth, its much less of the problem. Also an integrator could take that TB and break it up to multiple customers, spreading out that cost. There's no reason someone with 3-4 cameras needs an entire TB.

Ironically I'm actually the anti-cloud guy in the office always railing about how it isnt feasible, but mostly because of the throughput issue (I always have the "store to SD card and upload at night/lower use times" argument used against me...).

Also BK as far as your required storage calculations, not that they are wrong, but for what I would personally offer; 720p camera with motion only recording = 800kbps; or 45GB per month. By that, I only need to reserve 200GB for a 4 camera customer (extra space for just in case). That leaves 800GB for 4 more customers out of that initial investment.

Its symantics at this point, but I just wanted to state the the storage cost is much less of an issue than the ISP/bandwidth cost issue.