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

ObjectVideo Acquired by Alarm.com on Mar 14, 2017
Once potentially the most recognized name in video analytics, ObjectVideo has effectively been sold for pieces. Alarm.com has now acquired what...
Hikvision People Counting Tested on Mar 09, 2017
People counting has historically been a difficult task, requiring specialized cameras, expensive software, and careful camera placement. But in the...
Positive Video Surveillance Outlook - 2017 Statistics on Mar 07, 2017
376 manufacturers and integrators revealed their outlook on the future of the video surveillance industry in a recent IPVM survey. Both groups are...
Axis CTO: Deep Learning 'Exciting Space' But Urges Caution on Dec 27, 2016
Deep learning interest is rising in video surveillance. 2016 saw: Hikvision's partnership with Nvidia Movidius launch a neural networks chip...
2017 Video Surveillance Predictions on Dec 15, 2016
2017 should be an active, if not rocky, year for the security industry, according to predictions from IPVM integrators. We surveyed integrators,...
Axis Partner Elder Care Video Analytics (Smartervision) on Dec 07, 2016
Can video analytics be used to improve the care of the elderly? Axis and a video analytics startup, Smartervision, are working together to do so....
Top Surprises in the Video Surveillance Industry 2016 on Nov 29, 2016
  The top 3 surprises of 2016 for integrators surveyed by IPVM were: The race to bottom, repeating 2015's Top Surprise Result New -...
Hikvision's ImageNet Win Analyzed on Nov 28, 2016
Hikvision is pushing hard to move up market and win at video analytics. One notable sign is Hikvision touting their #1 ranking for an ImageNet...
China Hot For Intelligent Video on Oct 27, 2016
The clear top theme at the 2016 Security China show has been intelligent video. This is a big shift from past years, and China's historical focus...
Hikvision Partners With Intel Movidius For Artificial intelligence Cameras on Oct 25, 2016
The world's largest camera manufacturer is partnering with the worlds largest semiconductor company to create a series of intelligent...

Most Recent Industry Reports

Broken Browser Support for Video Surveillance on Mar 22, 2017
Modern web browsers have left the security industry behind. Current Chrome, Firefox, and Microsoft Edge browsers do not support NPAPI plugins,...
ADI Favorability Results on Mar 22, 2017
150 North American integrators provided feedback on 6 distributors, and why they do (or do not do) business with ADI. ADI is clearly a big name in...
1 Million Dahua Devices Exposed To Backdoor on Mar 22, 2017
Statistics show that 1 million Dahua devices are publicly exposed and vulnerable to the Dahua backdoor. Despite this, Dahua has downplayed the...
Hikvision Hires Crisis Communication Writer on Mar 21, 2017
Hikvision has hired a crisis communication writer as the company ramps up its efforts to deal with the 'crisis' it feels it is facing. 'Crisis...
Glass Break Sensor Tutorial on Mar 21, 2017
Burglars often break glass windows to get into a house. Using glass break detectors in conjunction with alarm contacts is a good way to protect the...
Unikey Smart Phone Access Control Platform on Mar 21, 2017
More and more people carry smart phones. Many think this could replace the conventional key or card for access control. However, using a phone...
VMS Update Automation Compared on Mar 20, 2017
Updating VMS software can be a tedious and time consuming processing, which historically has required users to access each machine, download update...
Anvil Traveler Threat Management Offering on Mar 20, 2017
A common component of enterprise security systems is traveler threat management, complementing the various physical security systems in place. One...
Simplisafe Warns Customers About Alarm Fines on Mar 17, 2017
Simplisafe markets themselves as a 'better way' than traditional professional alarm companies. However, in one key way, Simplisafe hides the...

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