International. The global market for video surveillance products recorded US$19.1 billion in 2019 and accounted for 56% of the physical security products business. Over the past 12 years it has been the largest and fastest growing of the three market sectors.
In 2020, Memoori estimates that demand has fallen to $18.1 billion. From 2020 it will grow at a CAGR of around 7% until 2025, when it will reach US$25.3 billion. This growth will be driven by a number of factors, including pent-up demand after COVID-19, AI video analytics software, VSaaS, integration across all three sectors, and IoT. This level of demand is within the capacity of the video surveillance business.
However, the analyst firm says it has shown that achieving these goals is not a technology or industry performance issue, but is essentially a geopolitical challenge. Will the United States and China resolve their differences and return to normal trade without embargoes or trade tariffs from either side?
The top 2 video surveillance equipment manufacturers in the world today, Dahua and Hikvision, still occupy at least 40% of the global video camera market. But the introduction of import tariffs and bans on Chinese goods for U.S. government-funded contracts has significantly reduced its sales in that country; they still retain their dominant position due to their strength in the world's largest market: China.
This puts them in a different league compared to even the biggest Western manufacturers. This protected housing market has the highest growth rate thanks to massive investments in Safe City projects. In addition, they have received government funding to engage in research and development.
On the horizon are other Chinese companies that want a share of the massive investment in these public sector projects. Huawei, one of the world's largest communications companies, is moving towards video surveillance and artificial intelligence startup Megvii intends to offer complete solutions. This could reduce the strength of HikVision and Dahua. Once these new Chinese entrants have established themselves in the Chinese public sector, they will expand overseas.
Western manufacturers have no control over this, but they have worked more on their strengths by developing their cybersecurity expertise, which appears to be a weakness in some Chinese products. Several Western manufacturers in 2018/19 demonstrated, particularly in the enterprise market, that they can win business by developing their brand, reliability and offering a better total cost of ownership.
In the next 3 years, as building the Internet of Things (BIoT) becomes a reality, IP cameras will connect directly within these systems and that will present a myriad of opportunities for them to contribute to solving other problems not necessarily associated with security.
Integration within physical security is now a common requirement, but BIoT provides two-way connectivity across all building services, minimizing duplication and reducing hardware and software costs. IP cameras will become a common sensor in buildings. Of course, this will change the routes to the market and introduce new players into the business.
As of 2019, there is plenty of evidence showing that the VSaaS sector has broken its niche market shackles and its capacity and performance value is no longer in doubt. Demand has been maintained during 2020 and we forecast that over the next 5 years it will generate significant growth.
By running in parallel, IoT is finally breaking through and this will lead to a massive increase in the amount of data being transferred from connected devices to cloud data centers for image processing and storage. This has been considered a major issue in the case of IP video cameras due to the bandwidth required. Edge computing can alleviate this problem by performing image processing at the edge of the network closer to the source of the data. Doing so reduces the bandwidth required between sensors, devices, and the data center.
In addition, there are also operational benefits in the use of state-of-the-art technology, which allows data to be processed faster and allows decisions to be made more quickly. A remaining concern is that once your video data is in the cloud, you could lose control over it and some sectors, such as the financial industry, may be reluctant right now to accept this and are much more likely to go the private cloud route.
Source: Memoori.
