The following 10 video surveillance predictions for 2012 serve to provide some guidance on the key trends and opportunities in each of these areas, which you might find useful in planning for the year ahead.
1.REFOCUSING ON IMAGE QUALITY
We forecast that by 2015, more than 70 percent of all network camera shipments will be of megapixel resolution. In spite of this, over the last 12 months, manufacturers have continued to push for greater numbers of megapixels. This trend plays to the common misconception that more megapixels/more resolution equates to better image quality. However, video quality is dependent on factors other than the number of megapixels on the sensor, such as the lens and image processing. IMS believes that for the vast majority of manufacturers, there will be a renewed focus on image quality in 2012.
To date, the market opportunity for “high-megapixel” cameras remains relatively niche. Manufacturers will need to further develop their points of differentiation. Likely advancements will be in well-established areas of need, such as low-light capability and wide-dynamic range; we will also see increasing adoption of P-iris lens technology and advances in live video.
2.FROM THE BRICS TO CIVETS
Given the Eurozone crisis that looks to potentially dampen global economic growth in 2012, where will video surveillance suppliers find opportunities for growth in the coming year?
Over the last few years, the BRICs have been the countries of choice for video surveillance vendors seeking new growth opportunities. Unlike the more developed markets in EMEA and North America, the BRICs were far less impacted by the recent economic downturn. IMS estimates that the total video surveillance equipment market in the BRICs was worth more than US$2.5 billion in 2010. With a growth rate exceeding 20 percent for the next two years, the BRICs will continue to offer video surveillance vendors solid growth opportunities, as the more established and mature video surveillance markets feel the impact from a potential second downturn. Beyond the BRICs, where should companies seek out new growth opportunities? The CIVETS (Colombia, Indonesia, Vietnam, Egypt, Turkey and South Africa) are being touted as the next set of tiger economies due to their rapidly industrializing economies. The indicators appear promising as the current long-term GDP rate for the CIVETS is in line with that for the BRICs.
In terms of spending on video surveillance equipment, the CIVETS are a minnow when compared to the BRICs. However, in the mid- to long-term, as infrastructure development and social mobility increase, the CIVETS will provide a strong opportunity for growth. In terms of market size, the CIVETS will not overtake the BRICs for many years, if at all; however, IMS believes that manufacturers will begin to explore the long-term growth potential of the CIVETS in 2012.
3.HD OVER COAX
So, what are the three key things that need to happen in 2012 to give HD-over-coax (focusing on HD-SDI only) equipment a platform for growth?
For HD over coax to penetrate the existing analog market, multivendor/brand compatibility is a must. Currently, there is little standardization among HD-SDI video surveillance equipment.
HD-SDI cameras transmit uncompressed HD video which can lead to high storage requirements and cost. For HD-SDI to breach the mainstream analog purchasing market, the price of storage needs to fall. Additionally, the supply of HD-over-coax compression ICs is effectively an oligopoly, as the market is perceived as niche and does not yet warrant other manufacturers entering the fray.
Manufacturers need to engage the correct market segments and promote HD-over-coax products as a potential alternative to analog or network video surveillance solutions.
IMS predicts that manufacturers will continue to push HD-over-coax equipment to the end user, increasing availability and choice. With the backing from large vendors, it is increasingly likely that a number of other large video surveillance brands will begin to introduce some form of HD-over-coax products into their portfolios in 2012. As with last year's predictions, we do not believe that 2012 will herald an explosion in demand for HD over coax. However, IMS forecasts that the HD-over-coax category will still see strong growth, with the market size nearly doubling, as increasing numbers of manufacturers begin to push this technology forward. [NextPage]
4.ANALYTICS TO THE EDGE
IMS predicts that in the coming years, the types of applications that can be performed at the edge on the device's main processor will increase. This will mainly be driven by the availability of more powerful processors and partly by the refinement of VCA applications to make them less processor-intensive.
Basic analytics will become standard features, and more advanced, “paid for” analytics will be performed at the edge. Over time, an increasing variety of analytics will be added as standard features, at no extra cost to the customer. Moreover, more powerful processors will enable multiple VCA algorithms to be performed at the same time to improve detection capabilities.
VCA is increasingly being used outside of the security realm, such as driver assistance cameras and interactive gaming consoles (such as Microsoft's Kinect). Some of these new markets for VCA offer high-volume potential, which is attracting the attention of chip makers.
5.MORE M&A ACTIVITY
Despite the economic turmoil, M&A activity in the security industry has continued over the last couple of years. However, video surveillance acquisitions have not been at the forefront of these deals; generally, M&A activity has been on a much smaller scale. Most recently, March Networks announced its plans to be acquired by Infinova in a deal worth around $90 million.
IMS' annual report on the global video surveillance equipment market estimated that the market in 2010 was worth more than $9 billion in 2010, with nearly 40 percent of all sales contributed by the top 15. We forecast that network video surveillance equipment sales will exceed 25 percent in 2012, despite uncertainty in the Eurozone. While we will not see a spate of billion-dollar deals in 2012, it is likely that a greater volume of midsized deals will complete in the next 12 months.
6.LOOKING UP TO THE CLOUD
At the end of 2010, IMS forecast the increased traction of cloud-based video surveillance, also known as VSaaS. The market certainly picked up in 2011, with notable sales growth of around 20 to 30 percent. However, the market is still emerging, developing and evolving. IMS believes that there are a number of potential avenues for suppliers of VSaaS to explore in the coming year.
A majority of the security cameras used in small and midsized enterprises are solely used for security reasons. However, some of the more tech-savvy users are beginning to leverage and monetize video from their existing systems. Rather than simply leaving video dormant on a hard-disk drive (HDD), business owners could post or stream video to the Internet, allowing customers to see real-time footage of the place they intend to visit. Video could be integrated with Groupon, TripAdvisor, Yelp or even Google Street View. Prior investment in security equipment could be transformed from an expense to a revenue-generating tool. IMS estimates that nearly 65 percent of the DVRs sold in 2011 were Ethernet-enabled, demonstrating the potential market for video to be distributed to the cloud and used for nonsecurity purposes.
7.TURNING POINT FOR SPINNING DISKS
The average price of HDDs has been falling for more than two decades. Now faced with the consequences of the recent flooding in Thailand, the video surveillance storage industry could well see the effects of a change to this trend.
The reported extent of the disruption to HDD production differs from vendor to vendor. Official statements of predicted price increases vary from 0 to 180 percent. The net result for 2012 is likely to be a softening to the trend of falling storage prices.
8.VMS, NOT AS WE KNOW IT
IMS predicts that 2012 will see a raft of innovation in the VMS space, as vendors attempt to stave off the threat of commoditization.
For the more established VMS vendors to continue to enjoy the historic high growth rates, they need to accomplish two key things: (1) maintain and increase presence in the upper market tier and (2) grow in the middle and lower tiers of the market.
The key selling feature of many VMS systems has been “openness,” and while the ability to integrate to a broad range of video surveillance brands is still desirable, this has become more of a basic expectation. IMS believes that VMS vendors will work on the following innovations in the next 12 months.
While different VMS solutions do contain unique features, user interfaces in general are fairly similar. Manufacturers will seek to develop simpler and more intuitive user interfaces in the coming year.
Applications for mobile platforms, such as iOS and Android, will be the front of many VMS manufacturers' arsenal in the coming year. The market for mobile video surveillance applications is still relatively immature; this is true for both the technology and the market demand. Simple concepts, such as leveraging location services, would provide enhanced user experience.
The integration between access control and video surveillance systems has been a well-trodden path in the last few years, and this trend will persist through 2012. VMS vendors will look to further develop their offerings from pure-play VMS platforms to security management platforms. VMS vendors have already sought to bridge the gap between supply and demand for situational awareness by implementing “PSIM-like” features in their platforms (such as enhanced functionality with Google or Esri maps). IMS believes that 2012 will see an acceleration of this trend. [NextPage]
H.264 has become the de facto compression technology for video surveillance systems. However, a combination of factors in 2012 could lead to advancements in video surveillance compression: (1) the flooding in Thailand; (2) the global economic climate; and (3) the phenomenal growth of HD and megapixel cameras.
In 2012, shipments of HD and megapixel cameras are forecast to increase by more than 70 percent, compared with the previous year. While the accelerated proliferation of high-resolution security cameras provides end users with benefits, such as greater clarity when viewing live video, the storage costs can be significant due to the larger file sizes. Some of the potential compression alternatives are as follows.
While there are many different variants of H.264 available on the market, the scalable video coding (SVC) variety, despite being well-established in other industries, is still not commonplace in the video surveillance industry. The key benefits of the SVC variant include a reduction in bandwidth (leading to a reduction in storage requirement) and dynamically resizable video.
An open and royalty-free video compression format based on VP8, it is debatable whether WebM is more efficient or performs better than H.264. However, WebM is optimized for HTML5 video, which could be a key consideration in VSaaS applications. The stumbling block is that WebM currently does not have an associated real-time streaming protocol.
High-efficiency video coding (HEVC) is still under development and is seen to be the evolution of H.264, providing increased compression efficiency. Ratification of this new standard is not scheduled until late 2012/ early 2013.
So, what will happen in 2012? It would be fair to say the video surveillance industry is not on the cutting edge of technology advancements in video compression. Longer term, HEVC is perhaps the most likely successor to H.264, but that will depend on just how much better it performs and its suitability for video surveillance applications.
10.INTERNET OF THINGS IN CHINA
One trend which is unlikely to have a big impact on the video surveillance market in 2012 but will receive more publicity and have a longer-term impact is the Internet of Things (IoT).
IoT is a concept in which individual objects are electronically identified and categorized virtually in an Internet-like structure. To be identified, such objects need to contain a tag such as an RFID tag. Once categorized, supply could more easily meet demand, waste would be reduced, and it would be possible to find objects when they become lost.
IoT is receiving a lot of attention in China. The Chinese central government is strategically focusing on the development of seven emerging industries. These industries are expected to enjoy preferential policy treatment in a number of respects. New generation of information technology (NGIT) is one of these industries; and IoT is one of the most important parts of NGIT.
China has installed millions of video surveillance cameras over the past 10 years, and these cameras could provide a source of information to verify the categorization of objects for IoT. It is questionable whether IoT will drive new investment into security cameras. However, the expected benefits of IoT will help justify public expenditure on video surveillance equipment.