The Physical Security Business 2018 to 2023:

Access Control, Intruder Alarms & Video Surveillance

This Report is the new 2018 definitive resource for access control, intruder alarms & video surveillance market research.

The total value of world production of Physical Security products at factory gate prices in 2018 was $31.55Bn, an increase of 8% on 2017. This is an increase of approx. 1% over the Compound Annual Growth Rate (CAGR) of 6.87% during the last 4 years. We are forecasting the market will reach $51.38Bn by 2023.

Of this, the world market for Video Surveillance products should grow at a CAGR of 13.43% to 2023. The reason for this is the demand for AI Video Analytics that should gradually be taken up over the next 5 years having the potential to add a further $2.3Bn to the video surveillance market in 2023. AI Video Analytics will be the number one game changer over the next 10 years in the video surveillance business, influencing the growth of most products that make up this business.

The developed markets of North America and Europe are losing global market share to Asia and particularly China. This is expected to continue to at least the end of the decade which is bad news for western manufacturers of Video surveillance products because they have failed to establish a solid business base and significant share in China; whilst 2 Chinese manufacturers have sales of more than $5 billion between them and now have the kind of scale that allows them to reduce prices to the levels that most western manufacturers can’t compete against.

Why do you need this report?
  • There are 4 regions in the world that make up over 80% of the world’s physical security business. Of these we estimate that China accounts for approximately 31%. We estimate China is now the biggest single country market for physical security products having increased its share by almost 50% in the last 7 years. Video surveillance equipment has been the major contributor here. The Chinese market has grown rapidly through a boom in new construction and Safe City projects in the public sector. However very little of this vast expanding market has been of benefit to western manufacturers.
  • We identify 14 companies (Group A Companies, who have revenue over $1Bn) accounting for some $17.95 billion in product revenues in 2018. The inclusion of Hikvision and Dahua and this year Axis Communications has given new impetus to this group and the merger between Thales and Gemalto has produced a new mega Identity Management / Access Control biometrics company. The net effect of this is that this group has significantly increased its contribution and the average sales revenue is $1,282m giving them 57% share of the physical security market.
  • In the report, we compare the performance of 16 different vertical markets in 2006 with 2018 and this shows there have been some significant changes during the last 10 years. The transport sector has almost doubled its share and at 16% is now the largest vertical. Many new opportunities have opened up, particularly for video surveillance, driven by the threat of terrorism and the need to improve safety and efficiency of traffic movements. Retail is the next largest sector with an 11.5% share. This vertical has shown how convergence with the business enterprise can improve the bottom line and is now regarded as an operational revenue saver by many of the world’s major retail companies.
Distribution of Sales by Major Grouping

VSaaS (Video Surveillance as a Service) has at last broken through the $1Bn barrier and is forecast to reach the $1.2Bn sales by the end of this year. Strong growth over the last 12 months has pushed hardware sales up by at least 50% and most forecasts predict demand will grow at a GAGR of 20% to 2023. There are a number of reasons for this. The first is that the supply side has put more effort and investment into providing VSaaS and ACaaS (Access Control as a Service) services and technology has overcome many limitations and reduced service costs. At the same time they are winning over system integrators to adopt cloud services and this has also provided a significant boost to growth.

Access Control is still a much smaller business than Video Surveillance and today is far less competitive, but consolidation is creating a more competitive environment and with it comes the confidence to move forward and take up the challenge of embracing new technologies that will deliver better performing products necessary to continue cranking up demand. If manufactures prefer to continue to be insular and proprietary, it will not be good news for continued growth, for traditional proprietary systems mean limited options for the customer and restricted possibilities for integration and scalability.

Within its 329 pages and 34 charts and tables, the report presents all the key facts and draws conclusions, so you can understand what is shaping the future of the physical security industry;
  • 2018 is the year that all the stakeholders in the Physical Security Industry finally got the message that the Cyber Security threat was capable of causing untold harm to their business. Now one of the critical buying propositions of physical security is “What have you done to make this equipment less vulnerable to cyber attack”? The owners and operators of buildings, particularly those having large building estates need to know that manufacturers and installers fully understand what needs to be done to reduce vulnerability and make sure it is applied to their equipment and systems.
  • The report also shows the full history of M&A activity since 2000. In 2018, mergers and acquisition activity in Physical Security totaled $7.33Bn (16% up on 2017), which looks like the start of a new wave of growth. The structure of the industry is still very fragmented with hundreds of small companies finding it increasingly difficult to compete and it looks inevitable that the general trend line of value and volume of mergers and acquisitions will continue upwards over the next 5 years, but at a modest growth rate.
  • The average value of a deal has increased from $100m in 2010 to $150 million in 2015 and in 2017 the average deal was $168 million. This year (2018) adjusting for the non-Physical Security business of the Gemalto acquisition the average deal was around $160 million. The number of deals in the range of $50m to $150 has increased and there has been more diversity across the different product types. Cross border acquisition accounted for 24% of the deals carried out this year. For the most part over the past 5 year period the main driver has been the need to extend geographic coverage but this year acquisition of technology has been the main objective. Some 62% of the deals involved the acquisition of US companies with the vast majority being domestic affairs.

Starting at only USD $1,750 for a Single User License, this report provides valuable information into how Physical Security companies can develop their business strategy through Merger, Acquisition and Alliance.

Comparison of Physical Security Penetration Who should buy this report?

The information contained in this report will be of value to all those engaged in managing, operating and investing in physical security companies (and their advisors) around the world. In particular those wishing to acquire, merge, sell or find alliance partners will find its contents particularly useful.

Table of contents
  • Preface
  • The Executive Summary
    1. Introduction
    2. Structure, Size & Shape of the Physical Security Business
      1. Structure of the Business
      2. Trends in Market Share by Group 2012 – 2018
      3. Sizing the Physical Security Business 2018 & Forecast to 2022
      4. World Distribution of Security Products by Major Regions
        1. The Status in 2018
        2. Market Size & Trends by Vertical Sectors
        3. Market Size by Region & Penetration
        4. China & the Rest of Asia Offer the Best Prospect For Growth
      5. Comparing & Sizing, Access – Intruder – Video 2018
    3. The Video Surveillance Market 2018 – 2023
      1. Market Size 2018 & Forecast to 2024
      2. Market Size of Cameras
      3. Market Size Video Management Software Systems
      4. Identifying & Measuring the Performance of Leading Camera Suppliers
      5. Identifying & Measuring the Performance of Leading VMS Suppliers
      6. Channels of Distribution & Trends
      7. Business Strategies for Ensuring Success in the Video Camera Market
        1. Scale / Economics Vs Technology / Performance
        2. Technology / Performance Provides a Solution for Non-Chinese Camera Manufacturers
      8. Technology that Drives Demand for Video Surveillance
        1. At the Edge Technology & Cloud
        2. Compression
        3. Video Analytics – Deep Learning
        4. Integration within Physical Security & other BIoT Sensors & Services
      9. The Market for Video Surveillance as a Service (VSaaS) 2018
        1. Drivers & Road Blocks to VSaaS
        2. Suppliers & Operators of MVaaS & VSaaS
        3. Acquisitions in MVaaS – VSaaS – ACaaS
      10. Video Technology – IP Cameras – HD Analog CCTV – Thermal Cameras
        1. IP Network Cameras
        2. The Future – IP Network – HDCCTV – Analogue
        3. Video Compression Technologies H264 Vs H265
        4. Thermal Cameras
      11. Body Worn Cameras
      12. Video Surveillance Storage Recorders
      13. Video Management Software (VMS)
      14. AI Video Analytics
        1. The Panorama of AI – IoT & Blockchain
        2. AI Chip Technologies Diversify & Open up New Applications
        3. The Development of AI Chip Technology – Machine Learning & Deep Learning
        4. The Advantages of Deep Learning and its Algorithms
        5. There is a Growing Demand for AI Video Analytics
        6. The World Market for AI Video Analytics
      15. Specialist Cameras & New Applications
        1. New Video Camera Designs
        2. Novel Applications for Video Cameras
    4. The Access Control Market 2018 to 2023
      1. Market Size 2018 & Forecast to 2023
      2. Identifying Measuring the Performance of Leading Access Control Suppliers
      3. Channels of Distribution for Access Control Systems
      4. Major Demand Drivers for Access Control
        1. IP Network Systems
        2. Integration within Physical Security and other BAS Services
        3. Connecting PACS – IAM & Logical Security
        4. Personal Identity Verification Card (PIV Card)
        5. Mechanical Locks Live On & Prosper
        6. Systems Integrators Preference to push Access Control
        7. PACS – Strategic Acquisitions
      5. The Impact of Technologies from Outside the Access Control Business
        1. Demand for Biometric Readers
        2. Near Field Communications (NFC) for Access Control Mobile Apps
      6. Growth through ACaaS – Cloud & Managed Access Control
        1. Growth Through ACaaS & Cloud Based Systems
    5. Intruder Alarms / Perimeter Protection (IA/PP) Market 2018 to 2023
      1. Market Size 2018 & Forecast to 2023
      2. Demand Drivers & Technology Trends
          5.2.1 Demand Drivers 5.2.2 Technology Trends
      3. Identifying & Measuring the Performance of Leading Suppliers
    6. Wireless Technology
      1. Wireless in the Video Surveillance Market
      2. Wireless in the Access Control Market
      3. Wireless in the Intruder Alarm Market
      4. Wireless Will be Driven by IoT
    7. Standards & Cyber Security
      1. ONVIF for Video Surveillance
      2. ONVIF for Access Control
      3. PSIA
      4. Cyber Security
        1. The Most Serious Threat to Physical Security Stakeholders & Emerging BIoT
        2. The Cyber Risk Threat Landscape
        3. Is Physical Security Industry is the Weakest Link in the BIoT Chain?
      5. GDPR – Privacy & Ethics
    8. Software Markets in the Physical Security Business
      1. Physical Security & Information Management (PSIM)
      2. Physical Identity and Access Management (PIAM)
      3. Situational Awareness
      4. Virtual Assistants Migrate to Physical Security
      5. Blockchain Refines Physical Security
    9. Business Development Opportunities Through Integration, IT Convergence & BIoT Require New Business Models
      1. Growth Through Integration of BAS Services & IT Convergence
      2. For Integration to Deliver its Full Potential it Needs “Open Systems”
      3. Real Estate Platforms Manage Buildings
      4. Growth Through Integration, IT Convergence within BAS Services
      5. Growth Through IoT & the Building Internet of Things (BIoT)
        1. The Impact of BIoT on Physical Security
    10. Business Opportunities that Offer Growth Today
      1. New Industry Verticals & Market Segments
      2. Shared Services, Smart / Safe Cities
      3. Shared Intelligence in the Private Sector
      4. Total Solutions versus Product Manufacture
      5. Business Models Focused on Product Specialization, Brand & Commoditization
        1. Product Specialization
        2. Commoditization
        3. Brand
      6. Maintaining a Viable Business in the IP Camera Market
      7. Big Tech & Business Opportunities Built Around Security as a Service
      8. Do Chinese Manufacturers Dominate the Video Surveillance Business?
    11. M&A Performance by Sector – Valuation and Outlook 2000 to 2023
      1. M&A Performance 2000 – 2018
      2. M&A Performance in 2018
      3. M&A Outlook 2018 – 2023
      4. M&A Analyzed by Business Segment 2018
      5. M&A Valuation – Exit Multiple Benchmarks
      6. M&A Activity by Country
      7. Strategic Buys Dominate M&A Activity but Private Equity Abstains
    12. Identifying Potential Acquisition Targets & High Growth Sectors
      1. Potential Acquisition Targets
      2. Identifying Acquisition Prospects in High Growth Sectors
        1. The IP Video Surveillance Industry
        2. Security Management Software
        3. Video Surveillance as a Service (VSaaS)
        4. Access Control as a Service (ACaaS)
    13. Investment & its Impact on the Security Industry
      1. The State of Venture Capital in the USA
      2. Investments in the Physical Security Industry 2018
    14. Strategic Alliance – Partnerships – Investments in Startups
      1. Strategic Alliances
      2. Partnerships & Investments in Startups Gain Momentum
Appendix
  • A1 – The World’s Major Physical Security Companies 2018
  • A2 – Acquisitions Announcements in 2017 to 2018
  • A3 – Potential Acquisition Targets 2018 & 2019
  • A4 – Directory of AI Video Analytic Suppliers
List of charts and figures
  • Fig 2.1 – Distribution of Sales by Major Grouping by Value 2018 ($m)
  • Fig 2.2 – Distribution of Sales by Major Grouping by Average Value 2018 ($m)
  • Fig 2.3 – Average Revenue for Group A, B, C, & D Companies 2012 – 2018 ($bn)
  • Fig 2.4 – World Sales of Security Products 2008 – 2023
  • Fig 2.5 – World Distribution of Security Products by Major Regions 2018
  • Fig 2.6 – Distribution of Security Systems by Building Type, 2006 compared with 2018
  • Fig 2.7 – Comparison of Physical Security Penetration by Major Region 2018
  • Fig 2.8 – World Sales of Security Products by Type 2018 ($bn)
  • Fig 3.1 – World Sales of Video Surveillance Products 2016 to 2023 ($bn)
  • Fig 3.2 – World Sales of Video Surveillance Cameras 2017 to 2023 ($bn)
  • Fig 3.3 – World VMS Market for Video Surveillance 2013 to 2023 ($m)
  • Fig 3.4 – Performance of Established Players / New Ventures / Challengers / Leaders in the Video Surveillance Camera Market 2018
  • Fig 3.5 – Performance of Established Players / New Ventures / Challengers / Leaders in the VMS Market 2018
  • Fig 3.6 – Distribution Channels of Video Surveillance 2018
  • Fig 3.7 – Machine Learning & Deep Learning Capability
  • Fig 3.8 – The World Market for AI Video Analytics Market 2017 – 2022 ($m)
  • Fig 4.1 – World Sales of Access Control Products 2013 to 2023 ($bn)
  • Fig 4.2 – Performance of Established Players / New Ventures / Challengers / Leaders in the Access Control Market 2018
  • Fig 4.3 – Model of Routes to Market for Access Control Systems 2018
  • Fig 5.1 – World Sales of Intruder Alarm Products 2013 to 2023 ($bn)
  • Fig 5.2 – Performance of Established Players / New Ventures / Challengers / Leaders in the Intruder Alarm Market 2018
  • Fig 7.1 – The Cyber Attack Life-Cycle
  • Fig 7.2 – Cyber Security Threat Vectors for Smart Buildings
  • Fig 7.3 – Building Elements Perceived to be at High Risk
  • Fig 8.1 – PSIM Software Landscape
  • Fig 11.1 – Security Deals Completed from 2000 to 2018
  • Fig 11.2 – Forecast of Deals 2018 to 2023
  • Fig 11.3 – Merger & Acquisition by Business Segment 2018
  • Fig 11.4 – Acquisition Valuation Benchmarks 2005 to 2018
  • Fig 13.1 – Strategic Alliances 2008 to 2018
Companies mentioned include among others
  • ACTi Corporation | Agent Vi | Aimetis | Allegion | AnyVision | Arcus Global | Arecont Vision | Assa Abloy | Avigilon | Axis Communications | Axsys Technologies | AxxonSoft | Basler | Blighter Surveillance | Bosch | BriefCam | Brivo | Canon | CDVI | CheckPoint Systems | CIAS | Cisco | CNB Technology | CNL Software | CSST | Dahua | Dallmeier | Digital Barriers | Dormakaba | DVTel | Eagle Eye Networks | Elkron | Firetide | Flir | FluidMesh | G4S | Gallagher | Genetec | Geutebruck | Gunnebo | Hanwha Techwin | Hikvision | Hitachi | Hitron | Honeywell | Huawei | Identiv | IDIS | iLoq | Indigovision | Invinova | Isonas | Jablotron | Johnson Controls | JVC | Keri Systems | Legic Identsystems | LG | Magal Security Group | Mango DSP | Milestone Systems | Mirasys | Mitsubishi | Napco Security | Nedap | Nuuo | Object Video | Optex | Panasonic | Paxton | Pivot3 | Primion Technology AG | Prism Skylabs | Pyronix | Qognify incl Nice Systems Security | Risco Group | Schneider Electric | SeeTec Communications GmbH | Senstar Stellar | SimonVoss | Smartvue | Sony | Stanley Black & Decker | Suprema | Sureview | Synectics | Tamron | TDSi | Teleste | TKH | Ubiquiti | Uniview | UTC | Vanderbilt | Verint | Vicon | VideoIQ | Vivotek | Wavesight | Wavestore | Zicom

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