VSaaS Market Size and State 2011

Author: John Honovich, Published on Feb 01, 2011

VSaaS has high hopes, small adoption so far and important questions to consider. In this report, we project, analyze and examine the key issues impacting the VSaaS market.

Let's start with our estimates of the VSaaS market:

  • $50 - $100 Million: Total Global Hosted VSaaS Subscription Revenue 2010
  • 75,000 - 125,000: New Cameras Added to Hosted VSaaS 2010
  • 200,00 - 300,000: Total Cameras Hosted VSaaS 2010
  • 0.1% - 0.5%: New 2010 Surveillance Cameras using Hosted VSaaS

VSaaS Flavors and Entrants

As an early market, VSaaS means many things to different people. Most importantly, how you categorize VSaaS offerings has a BIG impact on the size of the market. Here are 3 commonly cited options:

  • Plug n Play Live Video Access: No video is recorded off-site but users can remotely access their cameras without performing network setup
  • Hosted Video/VSaaS: Video is recorded 'in the cloud' and not on-site (the traditional way).
  • Managed Video/VSaaS: Video is recorded on-site (the traditional way) but plug n play remote access to video is provided.

Note: If you are new to VSaaS, review our VSaaS Training including 60 minutes of video screencasts.

In our analysis, we are focusing on Hosted Video/VSaaS as (1) it is the most significant break from traditional surveillance and (2) it is the 'purest' version of cloud services. This does not mean we believe it is the best or the most likely to succeed. Indeed, we believe managed video is even more compelling for most traditional surveillance users for the foreseeable future.

Dozens of entrants already exist in the VSaaS market. A good approximation is about 25 providers who develop their own solution. However, this can become confusing as many providers allow re-selling / re-branding making it appear that there are hundreds of 'unique' offerings. 

Review a directory of over 25 VSaaS providers  in our VSaaS Competitive Comparison.

Data Points, Estimates and Errors

From private conversations with leading providers of hosted VSaaS, we hear 3 common ranges of adoption:

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

  • Few hundred cameras for providers just getting started
  • Few thousand cameras for providers with a few years experience
  • Low tens of thousands of cameras for fairly established providers

The VSaaS market is quite young and while some pioneers existed before 2008, most of the development has occurred in the last 3 years. Because of this, it is very hard to see the total number reaching even a million (as a point of reference, some 40 to 70 million surveillance cameras are likely in use world-wide). If the hosted VSaaS number exceeds the 500,000 we estimate, we suspect that would be from telecommunication providers using non-traditional channels. That noted, signals indicate most telcos still trying to figure out this offering.

Cost ranges significantly with end user pricing as low as $5 and as high as $40 per camera per month. The variance is driven by differences in resolution (e.g., CIF vs 4CIF), storage type (continuous vs motion based) and storage duration (3 days, 7 days, 1 month, etc.) offered.

The $50 - $100 Million 2010 subscription revenue estimate results from multiplying an average monthly price (e.g. $15 USD) times total number of cameras (e.g., 250,000). Of course, this depends on estimating end user price or provider price. Some VSaaS providers use dealers (e.g., Axis AVHS to providers to dealers) while others sell direct (Viaas, Dropcam, Archerfish). Our VSaaS Competitive Comparison breaks down channel strategy and pricing levels for various providers.

Additionally, you could factor in the revenue from associated camera sales. Most VSaaS cameras are relatively simple, SD resolution, cube cameras with an end user price of $75 to $150. Camera sales could increase the overall market size by another $10 Million (assuming $100 camera price and 100,000 new cameras sold in 2010 for hosted VSaaS). While most VSaaS providers require to use their cameras (with special firmware loaded on), some VSaaS providers allow for 'open' connectivity.

Ultimately, given that the global video surveillance market is roughly $10 to $20 Billion in annual sales, VSaaS is a very tiny subsegment today (certainly understandable given its relative newness).

What is Axis's Role?

Appreciating Axis's role is important to hosted VSaaS. Axis is not only a gorilla in IP cameras, they have been the most aggressive developer of hosted video offerings. Indeed, if you aggregated all the cameras hosted by their partners, Axis would certainly be the market leader. On the other hand, the market is very early and Axis faces some strange obstacles. While the technology is sound (see our Axis AVHS test results), Axis must worry about offending/upsetting partners in the much more established and lucrative traditional surveillance applications (resulting in an inefficient double indirect business model). As such, the offering remains relatively simplistic yet expensive. (Read our critique on Axis's VSaaS business case for more).

Who is Using Hosted VSaaS?

Here are the most common uses of hosted VSaaS we see:

  • Residential use for one or two cameras
  • Small business use for a few cameras
  • Multi-site businesses with a few cameras per site

More than 75% of the market fits in this 3 use cases. Hosted VSaaS has made almost no dent in the traditional 8 or 16 camera market and is far far away from being a player in the 'enterprise' video surveillance market.

What are Hosted VSaaS's Issues and Obstacles?

Upstream bandwidth availability and the relative cost of centralized storage are the two most important issues that VSaaS faces. Unlike most cloud offerings where bandwidth consumption is relatively small (think e-mail or CRM), video's bandwidth consumption is relatively massive, resulting in insufficient upstream bandwidth and the cost of centralized storage. For more on why these are issues, review our VSaaS Fundamentals training.

Directly related to these technical issues is the resulting high price of VSaaS compared to traditional surveillance. As we demonstrated in our VSaaS ROI critique, with $10-$20 monthly pricing, almost all end users would save on choosing traditional surveillance (e.g., DVR/NVR or VMS). Indeed, with entry level VMS software prices falling, this obstacle will get worse.

What's the Future for VSaaS?

With the low starting point and broad level of provider growth, VSaaS adoption will grow across many dimensions. As such, it is easy to forecast 30-50% CAGR over the next 5 years.

Equally important, the core value proposition of all VSaaSes - easy remote access to surveillance video - is a highly desirable feature to almost all users (from homeowners at the office to the police in their vehicles). As such, we expect to see the adoption of the 'plug n play' remote aspect of VSaaS to expand into traditional markets.

The two most interesting strategic question for the future of VSaaS are:

  1. Can VSaaS cross the chasm into the 8-16 camera market?
  2. Will monthly service fees replace DVRs/PCs/VMS purchases?

The 8 - 16 camera market is a major surveillance segment representing the majority of surveillance users (though not revenue). At VSaaS's current 1 - 3 camera niche, it can help expand surveillance into the home but it does little for business users.

As for service fees, if the market moved away from appliance sales, PC sales and VMS licenses, it would result in a dramatic disruption against most of the established manufacturers and a sea change in how users deployed surveillance.

Our answer to both of these questions, for the next 3 - 5 years is No and No due to structural cost/technological barriers. As such, we believe hosted VSaaS will remain a niche.

However, we do believe managed VSaaS and adding 'phone home' capabilities to existing DVRs, NVRs and VMS will become an important feature for incumbents, adding value to existing customers and hurting the pure hosted providers.

How does VSaaS Impact You?

Right now, how VSaaS impacts you depends on where you are in the market. Here are recommendations for different groups:

  • Residential / Consumer: This could be an interesting option, especially if are offered it as a low cost add on to a phone or cable package. However, you can avoid these monthly fees. See iCam as a good option for iPhone users or Lorex  for general use.
  • Small to Medium Business: Hosted VSaaS is unlikely to be a fit as it's just too much money for your 8 - 16 camera deployments. However, managed VSaaS could be interesting and useful.
  • Enterprise / Corporate / Government: VSaaS is so far away meeting your functionality needs that it is not worth considering outside of future trend tracking.
  • Dealers Small to Medium: I know you are all supposed to pray at the altar of recurring monthly revenue and as such Hosted VSaaS should be your savior. We are skeptical of the uptake though in the professional market as it's a bad deal for most of your customers.
  • Large Systems Integrators: VSaaS does not meet your large customer's needs and has little practical use. However, at this level, testing and being well informed of future developments is important.

Related Reports

Hikvision USA Starts Layoffs on Sep 18, 2018
Hikvision USA has started layoffs, just weeks after the US government ban was passed into law. Inside this note, we examine: The important...
Favorite Intercom Manufacturers 2018 on Sep 14, 2018
Intercoms are certainly increasing in popularity, driven by the integration of video and IP networking. But who is the favorite? On the one side,...
October 2018 Camera Course on Sep 13, 2018
Today is the last day to save $50 on the October 2018 Camera Course, register now. This is the only independent surveillance camera course,...
VMS Export Shootout - Avigilon, Dahua, Exacq, Genetec, Hikvision, Milestone on Sep 13, 2018
When crimes, accidents or problems occur, exporting video from one's video surveillance system is critical to proving incidents. But who does it...
Ambarella on Computer Vision and US Hikua Ban on Sep 10, 2018
Ambarella, a widely-used video surveillance component supplier, is betting on the rise of computer vision and is already seeing a sales impact from...
Dahua Low-Cost 4MP Camera Tested (N44CL52) on Sep 10, 2018
4MP use continues to increase, especially in low-cost models, according to integrators in our 2018 Resolution Usage Statistics. We bought Dahua's...
Dell Launches IoT for Surveillance on Sep 05, 2018
Historically, Dell has been a PC and server provider (e.g., "Dude, you're getting a Dell") and widely used for surveillance storage. However, in...
Directory Of 110+ Video Management Software (VMS) Suppliers on Aug 30, 2018
This directory provides a list of Video Management Software providers to help you see and research what options are available. Listing...
Ligowave Wireless Profile - Ubiquiti Competitor on Aug 27, 2018
Ubiquiti has become the most common choice for wireless in video surveillance (see Favorite Wireless Manufacturers) but not without controversy and...
Inputs/Outputs For Video Surveillance Guide on Aug 24, 2018
While many cameras have Input/Output (I/O) ports, few are actually used and most designers do not even consider them. However, a good understanding...

Most Recent Industry Reports

Alexa Guard Expands Amazon's Security Offerings, Boosts ADT's Stock on Sep 21, 2018
Amazon is expanding their security offerings yet again, this time with Alexa Guard that delivers security audio analytics and a virtual "Fake...
UTC, Owner of Lenel, Acquires S2 on Sep 20, 2018
UTC now owns two of the biggest access control providers, one of integrator's most hated access control platforms, Lenel, and one of their...
BluePoint Aims To Bring Life-Safety Mind-Set To Police Pull Stations on Sep 20, 2018
Fire alarm pull stations are commonplace but police ones are not. A self-funded startup, BluePoint Alert Solutions is aiming to make police pull...
SIA Plays Dumb On OEMs And Hikua Ban on Sep 20, 2018
OEMs widely pretend to be 'manufacturers', deceiving their customers and putting them at risk for cybersecurity attacks and, soon, violation of US...
Axis Vs. Hikvision IR PTZ Shootout on Sep 20, 2018
Hikvision has their high-end dual-sensor DarkfighterX. Axis has their high-end concealed IR Q6125-LE. Which is better? We bought both and tested...
Avigilon Announces AI-Powered H5 Camera Development on Sep 19, 2018
Avigilon will be showcasing "next-generation AI" at next week's ASIS GSX. In an atypical move, the company is not actually releasing these...
Favorite Request-to-Exit (RTE) Manufacturers 2018 on Sep 19, 2018
Request To Exit devices like motion sensors and lock releasing push-buttons are a part of almost every access install, but who makes the equipment...
25% China Tariffs Finalized For 2019, 10% Start Now, Includes Select Video Surveillance on Sep 18, 2018
A surprise move: In July, when the most recent tariff round was first announced, the tariffs were only scheduled for 10%. However, now, the US...
Central Stations Face Off Against NFPA On Fire Monitoring on Sep 18, 2018
Central stations are facing off against the NFPA over what they call anti-competitive language in NFPA 72, the standard that covers fire alarms....
Hikvision USA Starts Layoffs on Sep 18, 2018
Hikvision USA has started layoffs, just weeks after the US government ban was passed into law. Inside this note, we examine: The important...

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