Video Surveillance HistoryBy John Honovich, Updated Dec 15, 2020, 11:19am EST
The video surveillance market has changed significantly since 2000, going from VCRs to an emerging AI cloud era and now impacted by coronavirus.
The goal of this history is to help professionals understand the important business and technology shifts that impact the market today, including:
- 2000 - 2005 DVR Era
- 2001 - 9/11 Impact
- 2006 - Infancy IP and VMS
- 2008 - 2012 MP Cameras Go H.264
- 2009 - 2013 Cloud Hype / Bursts
- 2010 - 2018 Struggles For Video Analytics
- 2012 - 2014 Rise and Fall of Edge Storage
- 2010s WDR and Low Light Improvements
- 2015 Smart CODECs Rise
- 2018 H.265 Mainstream
- Storage No Longer Major Problem
- Slowing of Camera Resolution Increases
- HD Analog Rises 2014, Niche Now
- Rise Cybersecurity 2015 - Current
- 2013 - 2017 Rise of The Chinese
- 2015 - 2017 Race To The Bottom
- 2018 - Now US vs China
- 2019 - Rise AI and Cloud Startups
- 2019 - Lock-In Systems
- 2020 - Facial Recognition Negativity
- 2020 - Coronavirus Impact
2000 - 2005, DVR Era
The first part of the 2000s witnessed the rise of DVRs, replacing VCRs, bringing two important advances - (1) replacing costly and cumbersome VHS tapes with digital recording and (2) enabling monitoring of video surveillance over IP networks.
Recorders were quite expensive in that era, with $5,000 to $10,000 for a 16-channel appliance common, even with limited storage and low resolution (CIF, a fraction of even SD, was widespread). However, it was less expensive than the operational costs of maintaining VHS tapes plus had the benefit that video could be viewed throughout an organization's facilities. Remote viewing over the Internet was possible but given limited bandwidth (max WAN bandwidth of 1Mb/s to 3Mb/s was frequent) and limited CODECs (this was before the rise of H.264) meant that the quality and speed of Internet-based video surveillance watching was poor.
2001, 9/11 Impact
Along with technology rapidly improving in the late 1990s to early 2000s, terrorism in the early 2000s, most notably 9/11, drove increasing demand for video surveillance.
Some of this was good but some bad. On the positive side, it increased awareness and interest in considering the emerging technology. And for sellers, it was clearly a boon as the fear of being the next target of terrorism made it easy to justify spending on these systems. On the negative side, many purchases were rashly made on technology that was not mature enough, that resulted in, at best, security theater, and, at worst, a waste of money. This has parallels with the 2020 coronavirus fever camera response.
2006, Infancy IP and VMS
By 2006, the industry was dominated by DVRs and SD analog cameras.
VMS software and IP cameras were still niches. Some megapixel cameras were offered but they were far more expensive than analog ones and only supported MJPEG encoding, making the storage and transmission of these cameras even more expensive.
Analytics was fairly 'hot' in 2006, driven by its potential and VC funding, though with very limited deployments.
The major players were generally Western and Japanese large manufacturers, with Chinese branded sales nearly non-existent in the West (Dahua and Hikvision were mostly unknown) and notable companies today like Axis, Milestone, and Genetec still relative 'startups' (indeed, Avigilon only started selling commercially in 2007).
2008 - 2012, MP Cameras Go H.264
The single biggest driver for IP was the adoption of H.264 for MP cameras. This drove mainstream IP camera deployment and, by extension, VMS software. With MP H.264, IP was able to deliver clear benefits in resolution with reasonable increases in total costs (compared to the earlier MJPEG only MP era).
2009 - 2013, Cloud Hype / Bursts
Along with the rise of MP / IP cameras came a significant interest in connecting those cameras to the cloud. The hope was that it would eliminate on-site recording, on-site maintenance, etc. Bandwidth limitations and poor cloud VMS capabilities doomed this. It never really gained much market share and with EMC dumping Axis, it marked the end of that era / error.
It would take many years for the cloud to re-emerge as a significant player within video surveillance.
2010 - 2018, Struggles For Video Analytics
Video analytics never went mainstream, marred by performance problems and unhappy customers. 2011, with ObjectVideo (OV) suing Bosch, Samsung and Sony confirmed and deepened the problems of video analytics, with OV, one of the most well-funded analytics companies effectively ending commercial sales and suing the industry. OV essentially won, with Avigilon paying nearly $80 million for ObjectVideo patents in 2014. The industry lost, though, as analytics remained a niche offering with minimal industry investment.
2012 - 2014, Rise and Fall of Edge Storage
For a few years, many saw edge storage as being a potential next big thing but it remained a niche. The promise of edge storage was to eliminate NVRs / recorder appliances as the storage and software could be deployed inside the IP camera. Reliability problems hurt early adopters. And the rise of low-cost Chinese NVRs (a few hundred dollars is now commonplace), as well as HD analog for even less (see below), pushed edge storage as more of a niche providing redundancy for higher-end applications.
WDR and Low Light Improvements
Cameras have become much better at handling challenging imaging conditions, especially harsh lighting and darkness. A decade ago, WDR cameras were fairly limited and expensive (this was when Pixim was considered leading edge). Low light performance was generally poor. And these problems were even worse for MP cameras where real WDR was essentially non-existent and low light performance was often terrible. The state of the art in our WDR Shootout 2011 is nothing compared to even 'average' true WDR cameras today.
2015, Smart CODECs Rise
One of the biggest changes in the last 6 years has been the rise of 'Smart CODECs' that regularly delivers 50% bandwidth reductions vs 'un-smart' codecs by dynamically adjusting the compression and I frame intervals based on analyzing the scene. Smart CODECs are independent of H.264 or H.265 and can be used with either. For the first few years of their introduction, they were primarily used with H.264 but are now generally used with H.265 as well.
2018, H.265 Mainstream
While smart codecs reduced the benefit of adding H.265 (by delivering bandwidth savings with 'old' H.264), by 2018, almost all manufacturers were releasing new cameras supporting H.265 + smart codecs.
Storage No Longer Major Problem
While there are certainly cases where storage is still a major challenge, the combination of smart codecs, H.265, and increased hard drive storage / price ratio has made video surveillance storage much less of an issue than ever before. In the 2000s and even the first half of 2010s, storage was a challenge, as much smaller hard drives, less efficient compression, and burgeoning HD resolution demand made the cost and complexity of storage a major factor. Now, storage is generally a simpler matter.
Slowing of Camera Resolution Increases
Contributing to that is camera resolution increases are slowing. In the 2008 - 2013 era, resolution (specifically pixel count) was roughly quadrupling from SD (~0.3MP) to 1.3MP. Now, resolution is continuing to increase, but on average, more in the 3 to 6MP range, which is a much slower rate of increase than in the 2005 - 2015 era. From our resolution usage statistics report, these two charts show the trend over the past 6 years:
8MP / 4K adoption is certainly gaining though, on the other hand, even 10MP has been available for more than a decade, so the overall adoption has been relatively slow. Moreover, there are very few cameras over 12MP even being sold today and while some talk about 8K (i.e. 33MP), such video surveillance cameras are still mostly conceptual.
2014 HD Analog Rises, Niche Now
While SD analog took a long time to 'die', it was finally killed off by HD analog in ~2015. For more than a decade, IP was the only practical way to deliver MP / HD. But early in the 2010s, HD analog, which transmits over coaxial cable just like NTSC / PAL, emerged. It has wiped out SD analog, becoming a player in home / SMB kit sales and in the low to mid market.
In the past few years, HD analog adoption relative to IP has slowed. While HD analog has increased its maximum resolution to 8MP and has added (limited) Power over Coax, even HD analog manufacturers have favored marketing their IP offerings, mainly relegating HD analog to the most cost-sensitive applications and geographies. See our HD Analog vs IP Guide
2015 - Current, Rise Cybersecurity
Cybersecurity has exploded into a major issue not only for the video surveillance industry but for the tech world, at large. The two most notable cybersecurity issues came from easily exploitable backdoors of the industry's largest manufacturers - Dahua backdoor and Hikvision backdoor - with the Dahua backdoor resulting in mass hacks in 2017. IPVM maintains a directory of cybersecurity vulnerabilities for video surveillance products.
The other major element of cybersecurity is the risk of state-sponsored or state-controlled companies. This first emerged as a practical issue in 2016 when Genetec expelled Hikvision and Huawei saying they were security risks. This has certainly increased as the US government has banned the use of those products as well as Dahua.
2013 - 2017, Rise of The Chinese
Even in 2012, Chinese manufacturers had a negligible market share in branded Western sales. For example, see our 2010 Hikvision IP camera test to see how bad they were back then. Indeed, Hikvision saw Western direct branded sales as a 'dream' in 2009.
While the Chinese had, for many years, been OEM suppliers to Western brands, it has only been since 2013 where Chinese branded sales exploded in the West.
Before the Chinese expanded in the Western market, $300 was considered low cost for IP cameras, now $100 (or less) MP cameras are commonplace. In particular, Hikvision has also been very aggressive about offering across the board price cuts monthly, something previously very rare in the industry. These moves combined have resulted in a significant ongoing shift to Chinese brands.
2015 - 2017, Race To The Bottom
This led to the 'race to the bottom', as manufacturers kept cutting prices, some to gain share (e.g., Hikvision) and others simply to stay alive.
The race to the bottom has now ended, due to a combination of less effective price cuts with prices having gotten so low, rising local costs as Chinese entrants expanded, cybersecurity issues (such as the backdoors), criticism / backlash and now the US government ban.
2018 To Current, US vs China
In 2018, the US government passed a law to ban US government use and funding for Dahua, Hikvision, and Huawei products. While the primary effect was obviously within the US, this move has increased scrutiny of these Chinese manufacturers elsewhere in the English speaking world and the EU (see our directory of Hikvision global news reports for examples).
Moreover, the US government's move to sanction Huawei and repeated reports that Dahua and Hikvision are being considered for sanctions for their billion dollars of contracts in Xinjiang, where a million people are held in concentration camps, could bring further changes to the video surveillance market.
How this concludes remains to be seen. When we last wrote this history in 2016, it is fair to say few would have expected such a conflict would arise so quickly and so heatedly, so it is hard to determine how it will end.
2019 To Current, Rise AI and Cloud Startups
While politics has become a major factor in video surveillance, recently, there has been an emergence of a record number of video surveillance startups.
AI and cloud are driving this. While the previous eras were driven by increases in resolution and price decreases, this era is being far more shaped by software to analyze video using 'deep learning' and to manage video in the cloud. Of course, video analytics and cloud have been around for more than a decade. The differences today are improvements in analytics and maturity of supporting technologies around cloud (bandwidth availability, cloud infrastructure, etc.). While AI and cloud are still niches within video surveillance today, we expect them to be the major drivers of new product selection in the 2020s.
For the last 2 decades, open systems have been predominant in video surveillance, whether via NTSC/PAL in analog or ONVIF in IP.
Now, a new wave of entrants is gaining traction with closed, locked in systems, that require buying products and then paying an ongoing subscription for the product to work at all. The most notable companies in this segment include Verkada, Meraki, and Rhombus, with Verkada gaining the most ground, fueled by $100+ million funding:
If these companies are successful, they could fundamentally change how video surveillance is sold and managed. While this fuels the financial results of these providers, we believe this is a net negative for both users and the industry as locking in users restricts choice and reduces options in connecting other cameras or systems.
2020 To Current, Fight Facial Recognition
Criticism of facial recognition has increased significantly in many parts of the world, including the US, adding to concerns that many Europeans have had. This criticism over the bias of facial recognition and its misuse has lead to calls for its regulation and even for it to be outlawed in an increasing number of areas. Related, The US Fight Over Facial Recognition Explained.
This has caused many facial recognition companies to face challenges, including layoffs at Anyvision and at FaceFirst. Indeed, Anyvision has shifted focus away from video surveillance towards access control to navigate these challenges.
A secondary, but still important issue, is how the wearing of masks have undermined the performance of facial recognition, especially in video surveillance. On the plus side, algorithms are improving and, at some point, mask-wearing will decline, but challenges for facial recognition are significant, for the time being.
2020 To Current, Coronavirus Impact
As it has the entire world, coronavirus has impacted video surveillance, including:
- Net revenue decline for the year, as lockdowns hampered buying and installing products. For example, integrators have been hit fairly hard but are somewhat recovering as the year ends.
- A surge in fever camera purchases in mid-2020. The hottest selling video surveillance item of 2020 was fever camera/screening. The problem was that many of these devices are rigged and health authorities have increasingly warned about their inefficiency. Despite this, companies who made or sold them did much better financially than those who did not.
- Cloud systems have benefited as the increase in work from home and remote monitoring has increased the importance of being able to manage and access systems from anywhere.
For 2022, integrators are optimistic but, as it is generally, so much depends on what happens with coronavirus, vaccine distribution, and supply chain issues causing product delivery delays.
3 reports cite this report:
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