International. The total value of physical security products at factory prices in 2020 is estimated to be US$31.7 billion, which meant a decrease of more than 7% compared to 2019. Sales declined in the 4 quarters as a result of Covid-19, which has ended eleven consecutive years of growth in the industry; according to Memoori's twelfth annual global report on the physical security business.
In June 2020, the World Bank published a baseline forecast that forecast a 5.2% contraction of global GDP in 2020. In this context, Memoori's report offers a better estimate of the global physical security products market heading into 2025 based on two scenarios. Right now, Covid-19 has had second peaks in Q3/Q4 and several countries are experiencing continuous lockdowns. The second scenario is estimated to seem more feasible when global markets take about a year to return to some normalcy and mass global adoption of a vaccine is achieved in 18 months. This is forecast to have a 65% chance.
By countering these macroeconomic forces, the pandemic has also created a demand for new solutions to help control the spread of the virus. Physical security products have risen to the challenge, helping to implement social distancing protocols across existing video and access systems with AI-powered analytics. Thermal cameras have also been implemented to measure people's temperature, and the demand is strong. However, its usefulness has been questioned, and the World Health Organization has said that, on its own, temperature detection "may not be very effective."
Despite all this, confidence remains on the strength of the industry and the growth prospects in the medium and long term. Market drivers such as the threat of terrorism and crime are unlikely to wane, while urbanization and smart infrastructure will further drive demand for more and better security systems.
Above all, the Covid-19 outbreak will force suppliers to radically rethink the way they operate their business, in particular resistance to externalities. In parallel, there will be lessons to be learned on how to have a more coordinated and resilient supply chain. The video surveillance business relies too heavily on Chinese original equipment and component manufacturers. The closure of many of these factories during the first two months of 2020 caused temporary supply chain problems.
The report notes that as we move forward after Covid, suppliers will need to thoroughly investigate customer requirements, particularly those businesses that have been severely damaged by the pandemic. These clients will find it more difficult to find the budget to invest and, therefore, they will have to be convinced of the return on their investment. ACaaS and VSaaS services can provide a solution to this problem and there is evidence of significant accelerated growth in cloud services.
Source: Memoori.
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