What does the DVTel-ioimage deal say about the video analytics market?

By John Honovich, Published on Jan 13, 2010

IP Video Market poll respondents are heavily divided about the meaning of the DVTel-ioimage deal to the video analytics market. Of 129 respondents, 43% believed it was a good sign, 40% thought it was not a good sign and the balance responded that they did not know.

In the comments to our report and from our private discussions with industry executives, the strongest theme was skepticism about the value of the deal and the reported $80 Million figure. We suspect that those who thought this was a good sign were influenced by the large reported acquisition price.

We think that the deal reaffirms the overall weakness of the video analytics market but is neither unexpected nor surprising given the general dissatisfaction of industry participants in the technology. We also believe that the actual monetary value of the deal is likely to be significantly lower than $80 million when the deal and subsequent transactions conclude in the years to come.

It will be interesting to see what, if any impact, this has on new investments in video analytic technologies/startups. We expect that investors will overlook this deal or focus on the high reported number and that significant funding will continue to be provided. On the other hand, we remain skeptical about the prospects of high returns on large investments made in this segment. The fundamentals blocking the market - specifically technology insufficient for customer's high demands - are not being resolved at a fast pace.

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