Do Video Analytic Providers Have to Sell Products?

By: John Honovich, Published on Apr 01, 2010

A CEO of a video analytics company makes the case that video analytic providers must sell products with video analytics integrated to be financially viable. 

Their key point is that selling licenses to video analytics results in a small annual market of $20 Million USD (assuming 10 Million total cameras, 10% using analytics and OEMs paying $20 per license).

We expect this premise as a ballpark estimate. We reject the notion that it makes selling licenses infeasible.

The more important aspect is the the excessive spending of video analytic companies. No one required OV, ioimage, Cernium, 3VR, etc. to spend $150 Million collectively.

 

Of course, when you spend that much money, a $20 Million market is infeasible. However, that is their fault, not a fundamental flaw in the market.

 

Small teams of computer vision experts, highly focused of analytics, with an OEM sales model can be financially successful in a $20 Million market.

 

Can you have large sales teams, big booths at trade shows, global advertising campaigns in trade magazines and be successful in a $20 Million market? No but it’s not required. These companies simply chose to do this.

 

Now, there’s no free lunch when building a product around analytics. Take Cernium’s Archerfish. They know need to become experts in building cameras, storing video centrally, running a data center plus they need to grow retail sales channels, etc.

 

The market for products may be larger but the costs and the competition is significantly greater. If you take $30-$50 Million investment for analytics, it’s probably your only move but they did not need to take it and now they have a very formidable challenge in its own right.

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