International. Market researcher Memoori's recent report, "The Physical Security Business 2018 – 2023," ranks the global video surveillance products market in 2018 at $17.57 billion and says it will increase to reach $32.64 billion by 2023.
This growth rate is higher than we estimated in 2017, so where does the additional growth come from? The study indicates that business conditions improved in 2018 and more innovative and better products were leveraged. Quality brands also increased their share of the business.
Further growth above this could come from the demand for Artificial Intelligence (AI) video analytics that will be phased out over the next five years, and has the potential to add another $3 billion to the video surveillance market by 2023.
The study indicates that Chinese manufacturers, Dahua and Hikvision, take at least 40 percent of the global video camera market and, despite the possibility of losing share in the U.S. due to high fees and being excluded from U.S. government-funded contracts, will maintain a dominant global position because of their strength in the world's largest market: China. This puts them in a very different league measured by scale; however, some of the leading Western manufacturers have shown that a quality brand can combat "the race to the bottom" and increase market share and profitability.
"However, Western manufacturers have lost the 'race for scale'. There seems to be little interest in acquiring and merging with other major vendors so that they can gain enough scale to reduce unit costs and challenge Chinese vendors in the SME market. But so far, working harder on their strengths of reliable quality products and solutions and developing their cybersecurity expertise has generated some pressure," Memoori's research says.
Further significant improvements in video surveillance equipment will be needed just to achieve a CAGR of 10 percent over the next five years. This will be much harder for Western manufacturers to achieve if they have to cut their margins to reach the market price of major products. In this context, there are some important applications where price is not king and innovative products that are sold at reasonable margins can offer better TCO. The next five years are going to be difficult for many small Western manufacturers to survive, particularly those that are not focused on developing brand recognition in the fastest growing vertical markets.
AI video analytics will be the number one game changer over the next 10 years in the video surveillance business, influencing the growth of most of the products that make up this business. Strategic alliances with new software developers offer more opportunities to get involved in this opportunity.
Source: www.memoori.com
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