Research: Strong growth for video surveillance software

New data from ABI Research forecasts five years of strong growth for developers of video surveillance software. According to a report issued by the firm last week, video surveillance software is expected to grow its revenue fourfold by 2013, going from current revenues of around $245 million per year to more than $900 million per year in 2013.

According to ABI Research's vice president and research director Stan Schatt, the full report addresses not only the video surveillance software, but also growth for surveillance cameras, storage devices, services and infrastructure such as cabling. Encoders and equipment for hybrid surveillance networks was also a forecast high-growth area.

In the prediction of fourfold growth for video surveillance software, Schatt said that was for the entire spread of video surveillance software, from the video management software from companies like Milestone, OnSSI, Genetec and others, to the analytics software from companies like Exacq, Verint and others.

"It's an interesting market to research because so many of the companies are so small," said Schatt. "Very few of them are public, if any. So you really have to talk to them directly to get an idea of the market. I spent a lot of time talking to integrators and vendors who do deployments, and asked them, as a rule of thumb, how much of the total deployment cost was each part (the software, the cameras, the cabling, etc.)."

Schatt credited the growth of video surveillance software to not only the growth of IP cameras, but he also noted that "there is a tremendous amount of possibility for the analytics software companies to draw budget money," as companies find ROI for using surveillance.

Nonetheless, Schatt said analytics technology is still very expensive and he said that he doesn't expect analytics to be part of that fourfold-over-five-years growth until later in that timeframe.

"They will still have to justify the costs," said Schatt. "I think that's one reason analytics will grow slowly. It is expensive. Only in the last two years has the software become good enough to warrant that cost."

In terms of overall funding for systems, technology and security projects, Schatt said he expects the current U.S. economic slow-down to have only a mild effect on the security industry.

"Government spending is still there, and transportation security still tends to get a lot of funds, so I don't see that going down," explained Schatt. "Where it will hurt is the small and medium business (SMB) market, which could conceivably grow very large, but those guys spend money out of current budgets. The SMB budget for security could really be hurt [if this current economic slow-down continues."

Schatt said he doesn't expect larger organizations to be affected so strongly, since they have dedicated capital expenditure budgets that are more fixed than SMBs.

At the same time, says Schatt, the video surveillance software industry is ripe for some consolidation.

"Having been covering overall infrastructure for 15 years, it sure smells like trends I've seen in the past where you have a bunch of little guys and some will consolidate and some will just fall by the wayside, since the market can't support all of them," said Schatt. "Some of the camera manufacturers are talking about interoperability standards, but you still have to decide what platform you will support. These software companies don't have the programming staff to develop for all the different cameras and programs."

ABI Research's full report is titled Video Surveillance Systems and is available for purchase from the company. Much of the company's previous research has been in the areas of wireless solutions.

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