Managed vs Hosted Video Competitive Pricing Dynamics

The tradeoff between managed and hosted video offerings is one of the most critical aspect in the growth of Video Surveillance as a Service (VSaaS). In this update, we examine key issues and limitations of current pricing levels. Readers needing a background should first read our VSaaS comparison guide.

As of June 2010, we believe a major barrier/error by providers is setting high rates for managed video offerings. While managed video solves some of the problems of hosted video (specifically by providing on-site storage thus eliminating problems/ costs for off-site storage and upstream bandwidth). However, most providers are still charging significant premiums for their managed video offerings even when all of the recording is done at the customer's site.

For instance, Axis partner Secure-i charges $20 per month per camera, Rogo charges $19.95 per month per site, two of the European providers we are currently evaluating have similar price levels even with no off-site recording. (The majority of providers do not currently offer on-site storage though many reports plan to do so in the next 6 - 12 months.)

We believe managed video offers real benefits to end users by simplifying and expanding their access to video remotely. On the other hand, the pricing that managed video providers can achieve is constrained by the substitute of setting up remote access oneself (through port forwarding and DDNS - read the IT networks training report if an explanation on these functions is desired). Doing this oneself requires some IT skill and time but it is fairly modest (perhaps a few hundred dollars to setup).

Since it can be a 'pain' and does generally require a service fee to manually do, managed video providers have an opportunity to charge but the maxmium charge is limited by the alternative available (ie DIY). Charging $20 per month when all the cameras and recorders are on-site looks to be a bad deal for users who may be up to $1,000 over a few years for something they could essentially replicate with a few man hours of effort.

This being noted, we see this as a major opportunity for incumbent VMS and DVR providers to bundle in managed video support into their existing products. This is a feasible and straightforward upgrade to existing products. We've only seen Lorex do it for their DVRs but they are using widely available third party technology from Yoics to do this. Most importantly, there is no ongoing charge for this.

Managed video provides value to consumers but significant monthly premiums have little chance of being competitive (or growing the market). We believe the best opportunity for growing the market, helping customers and strengthening products is adding in managed support to video surveillance products as a free or low cost add-on.