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video surveillance
market trends
Trend 2:
Star markets the fastest
growing products and regions for 2015
By Jon Cropley, Principal Analyst, IHS Technology
Trend 3:
Driving the transition from
direct channels to distribution
By Niall Jenkins, Research Manager, IHS Technology
The global market for video
surveillance equipment will grow
by over 10 percent in 2015, IHS
is forecasting. However, the total
market is made up of many differ-
ent products, geographic regions,
and end-user sectors. Some mar-
kets will grow much faster than
the average, and below are those
predicted to grow fastest in 2015.
Products
As predicted, there was rapid
growth in demand for 180/360
-degree network cameras last year
and there are no signs of this
slowing in 2015, when global unit
shipments are forecast to grow
by over 70 percent. The number
of vendors offering such cameras
also continues to grow, as does the
number of video- management
software applications support-
ing them. Such 180/360-degree
network cameras are proving
particularly suitable for sectors like
retail, airports and casinos, where
Video surveillance equipment sold
through distribution channels was
estimated to account for 55 per-
cent of global equipment revenues
in 2013 and for over 60 percent
of European market revenues
in the same year. Furthermore,
these percentages are forecast to
increase as integrators and install-
ers take advantage of the benefits
of purchasing equipment through
distribution. This is a marked
change from a couple of years ago,
when integrators often sought to
develop direct relationships with
equipment vendors.
One reason for this transition
is that margins are continuing to
decline. In 2015, average distribu-
tor margins in the American video
surveillance market are forecast to
drop to close to 17 percent, while
monitoring wide indoor areas is
important.
Geographic regions
In 2015, the Middle Eastern
market for video surveillance is
forecast to exceed $500 million
for the first time. Growth will be
driven by a combination of legisla-
tion, construction and preparation
for major events, including the
2020 World Expo in Dubai and
the 2022 FIFA World Cup in
Qatar. Even so, doing business in
the Middle East is not without its
challenges, and political and social
tensions alike can quickly change
spending priorities.
Many of the largest existing
video surveillance installations in
the world are in the Middle East,
and numerous large-scale projects
are in development. While the
impact of low-cost manufacturers
and falling equipment prices and
has been felt across the collec-
tive Europe-Middle East-Africa
in the Europe-Middle East-Africa
(EMEA) region, margins are
predicted to fall below 22 percent.
This means the distribution chan-
nel is incredibly competitive, even
when compared with purchasing
equipment directly from vendors.
Margins in North America,
meanwhile, are driven by competi-
tion, especially in the network
video surveillance market, into
which information technology
value-added resellers (IT VAR)
and distributors have entered.
Companies coming from the
IT industry are typically used to
working with much lower margins
than traditional security compa-
nies. The markets in Europe and
Asia are predicted to follow suit,
with increasing numbers of IT
companies entering the market.
(EMEA) region as a whole, the
Middle East specifically continues
to have the potential for high
growth. In many cases end users
are expected to stick to the same
budget levels, but more equip-
ment will be bought.
end-user sectors
Last year, IHS was forecasting
that the city surveillance as well as
the utilities and energy end-user
sectors would grow quickly during
2014. Similarly, IHS projects
quick growth for both sectors in
2015. One end-user sector with
higher-than-average forecast
growth, however, is education.
In the wake of shooting
tragedies such as the Sandy Hook
Distributors are also offer-
ing more. Traditional security
distributors can provide financing,
training and lead generation, in
addition to managing the vendor
relationships, dealing with import
taxes and holding inventory. As
systems integrators increasingly fo-
cus on recurring monthly revenues
(RMR) from service contracts, the
installation of equipment is seen
as a necessary, but not profitable,
process. Consequently, anything
that makes navigating the poten-
tial costs and pitfalls of installation
easier and more predictable is
welcomed by integrators.
Finally, the transition to
network equipment is changing
the role of the distributor. From
the IT industry, in particular, IT
VARs are developing bundles of
massacre in the United States,
educational establishments are
adopting security systems that
allow authorities to respond to
emergencies in real time. For video
surveillance, this can mean that
critical system features include the
ability to provide automatic alerts
of threats, as well as integration
with other electronic security
systems. Integration with access
control, for instance, can mean
that when an intruder is detected,
doors can be locked to prevent
access to buildings.
The types of threats an educa-
tional institution may encounter
could change during the course
of a day. In the daytime, the main
issue is restricting access to appro-
priate individuals. At night, the
main issue can often be protection
against vandalism.
For 2015, the global market
for video surveillance equipment
in the education end-user sector is
forecast to grow by 15 percent.
products that already work to-
gether. This trend, which mirrors
developments in the IT industry,
is making video surveillance
project installations easier for IT
integrators who are more familiar
with networks and switches than
they are with security cameras
and network video recorders. As
the video surveillance market
continues its transition to network
equipment, this will be an increas-
ingly important trend driving the
transition from direct channels to
distribution in 2015.
Jon Cropley,
Principal Analyst,
IHS Technology.
Niall Jenkins,
Research Manager,
IHS Technology.