International. Memoori's 2019 report on the physical security business will show that the total value of global production of factory-priced physical security products in 2019 was US$34.31 billion, an increase of 8.5 percent over 2018, while compound annual growth over the past 5 years was 7.24 percent.
This is remarkable growth given that global GDP growth averaged around 2.7 percent between 2012 and 2017, so growth in the physical security business has outpaced it by a factor of 2.6.
Over the past 10 years, the market has grown at a compound annual growth rate of 6.27 percent. The market is forecast to reach US$56.76 billion by 2024 at a CAGR of 10.72 percent, however, significantly different growth rates will apply in each of the three companies (access control, video surveillance, intrusion alarm) and geographic regions.
Video surveillance had the highest growth rate at 9.74 percent in the last 3 years, as Western manufacturers fought against Chinese competition, but still have little chance of penetrating the Chinese public sector business. China is by far the largest single market, probably accounting for 35 to 40 percent of global demand.
Access control was expected to deliver slightly higher performance than 8.2 percent as it further expanded the IP network business, advancing deeper into biometrics, identity management, wireless locking systems, and ACaaS. This would have been the third year in a row that it posted the highest growth rate of the three companies, but price pressures are starting to ease, in part due to consolidation and weaknesses in the supply chain. This has reduced growth when measured by value.
The intrusion systems business, the father of the physical security business, has long since reached maturity, but its increasing use of radar, thermal and multi-sensor cameras has contributed to a 3.8 percent growth in 2019. In addition, advances in sensor technologies, wireless technology and integration with video surveillance, access and outdoor lighting have contributed to its growth. The report acknowledges that there could be some video surveillance products that are being installed in PP/AI projects but are not counted in this sector and this could have distorted their growth.
Market forecast for 2024
The forecast for the next 5 years until 2024 takes into account that there will be no improvements in world trade and little growth in GDP over the next two years. The past 5 years show that the physical security business can achieve solid growth in a low-performing economic climate, because new technology is improving product performance and continuously reducing the cost of ownership.
Terrorist activities are unlikely to be suppressed over the next 5 years and government budgets to counter this will increase with the consequent benefit to the physical security business. In the commercial world, the demand for more comprehensive connectivity in the 3 branches of the physical security business and the commercial enterprise will grow, with the help of IoT technology. This will become evident by the end of 2020 with a solid acceleration of growth over the next 4 years.
The analysis forecasts a CAGR of 10.7 percent in terms of value over the next 5 years, from 2019 to 2024. The main drivers will be AI video analytics software that will accelerate to a potential of $3.5 billion by the end of 2024 from a minuscule size today and also creating increased demand for more video surveillance hardware.
