The Romance and Realities of Recurring Revenue

By: John Honovich, Published on Aug 08, 2010

Our industry's recurring revenue romance obscures the reality that such efforts may not be viable competitively. We believe this significantly increases the risk that video surveillance based recurring business revenue models will dissapoint.

Viable recurring revenue business models require ongoing material costs. If such costs do not exist, competitors can charge a moderate up-front price with no ongoing fees (as ongoing costs are minimal). For such offerings, a provider charging ongoing fees will be disadvantaged to a one-time charge option. The recurring cost provider becomes an inefficient loan provider. Securing bank loans/financing will provide savings to most customers.

Managed video offerings have very low ongoing service costs, making no ongoing fees fit naturally. Despite this, we see many providers and integrators pursuing managed video offerings that charge $10, $20, even $30 per camera per month. While free offerings are minimal currently (see StarVedia and Lorex for early offerings), it is inevitable that incumbent VMS/DVR providers offer managed video as a free or very low cost add-on (especially if the monthly fee offerings can any tractions). At that point, recurring charges will be hard to command.

While hosted video has ongoing service costs (e.g., storage, bandwidth), we believe managed video provides the most important user benefit at a far lower cost than hosted video can provide. The key end user value is providing simple remote access anywhere the user is - both managed and hosted can provide this (though managed provides this at much lower cost). Hosted can eliminate the need for on-site storage which eliminates on-site service need (for the recorder) and eliminates risk of stolen on-site recorder. However, this adds significant costs and reduces the video quality/number of cameras that can be recorded.

Recurring revenue clearly offers providers acquisition and stability benefits. Nonetheless, if viable non-recurring revenue charging competitors likely arise, recurring revenue providers will be infeasible.

Comments : PRO Members only. Login. or Join.

Most Recent Industry Reports

Alarm Veteran "Demands A Criminal Investigation" Of UL on Oct 18, 2019
The Interceptor's Project pressure against UL continues to rise. Following Keith Jentoft's allegation that "UL Has Blood On Their Hands", Jentoft...
Camect "Worlds Smartest Camera Hub" Tested on Oct 18, 2019
Camect is a Silicon Valley startup that claims the "Smartest AI Object Detection On The Market", detecting not only people and vehicles, but...
Hikvision Global News Reports Directory on Oct 17, 2019
Hikvision has received the most global news reporting of any video surveillance company, ever, ranging from the WSJ, the Financial Times, Reuters,...
Camera Calculator V3.1 Release Improves User Experience on Oct 17, 2019
IPVM has released a new version of our Camera Calculator, V3.1, with significant user experience improvements, a new development plan, and an...
Securing Access Control Installations Tutorial on Oct 17, 2019
The physical security of access control components is critical to ensuring that a facility is truly secure. Otherwise, the entire system can be...
Access Control Course Fall 2019 - Last Chance on Oct 17, 2019
Register Now - Fall 2019 Access Control Course. Thursday, October 17th is the last day to register. IPVM offers the most comprehensive access...
US DoD Comments on Huawei, Hikvision, Dahua Cyber Security Concerns on Oct 16, 2019
A senior DoD official said the US is "concerned" with the cybersecurity of Hikvision, Dahua, and Huawei due to "CCP" (China Communist Party)...
Pelco Sarix Pro3 Camera Tested on Oct 16, 2019
Pelco has released their Sarix Professional Series 3 cameras, claiming "more security detail in challenging scenes with excellent low light and...
IPVM Camera Calculator User Manual / Guide on Oct 16, 2019
Learn how to use the IPVM Camera Calculator. The guide below includes instructions, images, gifs, and videos demonstrating and explaining the...
Altronix Claims Tango 'Eliminates Electricians' on Oct 15, 2019
Power supply provider Altronix claims its new Tango power supply 'eliminates the need for an electrician, dedicated conduit and wire runs'. In...