How the Recession Impacts Video Surveillance

Author: John Honovich, Published on Jul 19, 2008

The video surveillance market will take a beating regardless of the hope that security is recession-proof. This report reviews the key reasons and impacts of the recession with concluding recommendations

  • This recession is different from the last one
  • The debt market collapse will make users delay new purchases
  • Megapixel cameras will fare the best
  • DVRs will continue to decline slowly
  • A shakeout of NVR/IP Video software companies will occur
  • Video analytics will fare the worst

Different from Last Recession

In the last recession, the video surveillance market was held up by (1) the introduction of DVRs and (2) the global war on terrorism.

At the beginning of the decade, most users had no video recording and the ones that did mostly had VCRs. The value generation of going from nothing or a VCR to a DVR was very high, especially because it eliminated many manual tasks required for a VCR. The move from DVR to NVR does not provide the same value as that of nothing/VCR to DVRs. As such, you should not reasonably expect the same motivation by customers to move to NVRs in this recession.

Secondly, the global war on terrorism boosted the last recession but cannot be expected to repeat now. For the past 7 years, both government and private sectors (think utilities, shipping companies, etc.) have funded an incredible amount of projects for homeland security. The US will to fund and fight a war on terrorism clearly seems on the way down. It is more likely that funding for video surveillance goes down than it goes up, especially given the bailouts the government will be engaged in for the next few years.

Delaying Purchases

In recessions, people delay buying new high priced items. Given that so many people already have video systems, it is easy for them to keep them a little longer. Yes, that DVR or analog camera is not the latest or greatest but it works for the most part. It is entirely sensible for organizations to delay.

The drive to delay will be enhanced by the tightening of the debt market. Stricter standards will make it harder for companies to obtain debt funding. Companies will rationally respond by eliminating or delaying new capital projects like video surveillance systems.

Get Video Surveillance News In Your Inbox
Get Video Surveillance News In Your Inbox

Megapixel Cameras will Fare the Best

Megapixel cameras work in the field. There prices continue to fall. They provide substantial increase in value over analog cameras and are offered by a small number of suppliers. All of this makes megapixel cameras likely to weather the recession well.

DVRs Decline Slowly

The recession should actually help DVRs somewhat. To the extent that it delays new projects to switch to NVRs, DVRs should benefit from service or replacement business. This is not to say that DVRs will continue to decline. Only that the decline should be slowed somewhat by the constrains a recession places on extensive change.

Shakeout for NVR/IP Video Surveillance Software

Way too many NVR/IP Video Surveillance Software companies exist. Easily 25 to 50 companies have developed and are marketing such solutions. Not enough differentiation exists between their products. Most of these companies are young and are not cash-flow positive. All of these factors indicate that many of these companies will fail. For the leaders in this space, this will actually be beneficial. However, customers need to be concerned about what systems they purchased because you may very well be left with an unsupported product from an out of business provider.

Video Analytics Will Fare the Worst

Video analytics demonstrates all the characteristics of a segment that will crash.

  • Most of the products work poorly in production use.
  • The products require buyers to find new budget
  • Most of the manufacturers basically offer the same solution
  • The companies are young and generally not cash-flow positive

I talk to industry leaders every day and the most common theme I hear is how disappointing video analytics have been. Underachieving products always far the worst during a recession. It is essenitally a “corporate Darwinism.”

Recommendations

For end users, be very careful about what NVRs or video analytics you choose. A poor choice here could result in you having a discontinued product in a very short time. The safe choice here is to select market leaders even if you pay modest premiums for them.

For manufacturers, be very cost conscious and get focused on the specific verticals you are strongest. If you run low on money in the next one or two years, the consequences could be dire. Although the signs in the field are just starting now, they will certainly get much worse before they get better. Better to get a head start than be caught when it's too late.

This all being said, the industry will come out of this recession stronger because bad companies will get flushed out of the market.

What do you think?

Related Reports on Video Analytics

Avigilon Favorability Results 2019 on Jan 15, 2019
Since IPVM's 2017 Avigilon favorability results, the company was acquired by Motorola and has shifted from being an aggressive startup to a more...
Gorilla Technology AI Provider, Raises $15 Million, Profiled on Jan 15, 2019
Gorilla Technology is a Taiwanese video analytics manufacturer that recently announced a $15 million investment from SBI Group, saying this...
Managed Video Services UL 827B Examined on Jan 09, 2019
Historically, UL listings for central stations have been important, with UL 827 having widespread support. However, few central stations have...
IPVM Best New Products 2019 Opened - 70+ Entrants on Jan 07, 2019
The inaugural IPVM Best New Product Awards has been opened - the industry's first and only program where the awards are not pay-to-play and the...
Axis Tailgate Detection Tested on Jan 04, 2019
Axis is aiming to tackle tailgating, one of access control's biggest issues, with the Tailgating Detector ACAP application. This camera app claims...
The Battle For The VSaaS Market Begins 2019 - Alarm.com, Arcules, Eagle Eye, OpenEye, Qumulex, Verkada, More on Jan 02, 2019
2019 will be the year that VSaaS finally becomes a real factor for professional video surveillance. While Video Surveillance as a Service (VSaaS)...
Cisco Meraki New Cameras and AI Analytics on Dec 14, 2018
Meraki has released their second generation of video surveillance with 3 new cameras, AI-based video analytics, and 2 cloud-based storage...
Top 2019 Trend - AI Video Analytics on Dec 10, 2018
160+ Integrators answered: What do you think the top industry trend will be in 2019? Why? AI / video analytics was the run-away winner with...
Alarm.com "AI" Video Analytics Tested on Nov 30, 2018
Alarm.com has announced what it calls an "artificial intelligence (AI) architecture and video analytics service", touting that  Alarm.com's...
Vintra "AI-Powered" Video Analytics Startup Profile on Nov 27, 2018
Vintra is a Silicon Valley startup focused on AI-based video analytics. They had booths at IACP and ISC West demonstrating their hosted or...

Most Recent Industry Reports

2019 Camera Book Released on Jan 22, 2019
This is the best, most comprehensive security camera training in the world, based on our unprecedented testing. Now, all IPVM PRO Members can get...
Milesight Company Profile on Jan 22, 2019
Milesight Technology, a Chinese company building an International branded business, says they are slowly building their presence through a series...
Intersec 2019 Live From Dubai Day 2 on Jan 22, 2019
There’s a massive presence from Chinese or China-focused video surveillance firms, chiefly Hikvision, Dahua, Huawei, and Infinova, at...
Cable Trenching for Surveillance on Jan 21, 2019
Trenching cable for surveillance is surprisingly complex. While using shovels, picks, and hoes is not advanced technology, the proper planning,...
Milestone Favorability Results 2019 on Jan 21, 2019
Milestone's favorability moderately strengthed, in new IPVM integrator statistics over their results from 2016. While the industry has been...
The IP Camera Lock-In Trend: Meraki and Verkada on Jan 18, 2019
Open systems and interoperability have become core features of video surveillance systems, as virtually all professional IP cameras integrate with...
NYPD Refutes False SCMP Hikvision Story on Jan 18, 2019
The NYPD has refuted the SCMP Hikvision story, the Voice of America has reported. On January 11, 2018, the SCMP alleged that the NYPD was using...
Mobile Surveillance Trailers Guide on Jan 17, 2019
Putting cameras in a place for temporary surveillance where power and communications are not readily available can be complicated and expensive....
Exacq Favorability Results 2019 on Jan 17, 2019
Exacq favorability amongst integrators has declined sharply, in new IPVM statistics, compared to 2017 IPVM statistics for Exacq. Now, over 5 since...
Testing Bandwidth Vs. Low Light on Jan 16, 2019
Nighttime bandwidth spikes are a major concern in video surveillance. Many calculate bandwidth as a single 24/7 number, but bit rates vary...

The world's leading video surveillance information source, IPVM provides the best reporting, testing and training for 10,000+ members globally. Dedicated to independent and objective information, we uniquely refuse any and all advertisements, sponsorship and consulting from manufacturers.

About | FAQ | Contact