Escalating security concerns are spurring the uptake of closed circuit television equipment (CCTV) across Europe. However, even as investments in video security technology rise, manufacturers face the challenge of educating end users and installers about the full potential benefits of new CCTV tools.
From tightening national defence, safeguarding personnel and protecting data and/or facilities to guarding important hard assets, reducing fraud and preventing common crime - security has become a necessary investment.
At the same time, responding to public concerns about heightened crime and general security, governments have enhanced funding of security projects. For instance, the UK Home Office has made significant investments in city centre CCTV projects.
Rising terrorist concerns are likely to cause such government funded security efforts to be replicated across Europe. And, as issues such as security and terrorism gain importance on social agendas, the widespread conception of CCTV being an intrusion on 'personal freedom' is expected to wane in many of the European countries that are currently reluctant. However, it will still take longer to change in some of the European countries with strong civil liberties traditions.
Extreme market fragmentation and a flood of cheaper Asian imports are triggering rapid price declines, especially in the lower and medium ends of the market. Reduced prices for components and better economies of scale are further contributing to falling prices.
This trend is promoting the adoption of CCTV cameras and systems across a wide range of public and private applications, including niche applications such as Nanny and Spy cams. CCTV is also gaining appeal among new end-user sectors such healthcare and retail.
On the other hand, falling prices have eroded profit margins and suppressed revenue growth. In addition, numerous cheap but unreliable products from overseas have dented the reputation of the industry. The challenge for manufacturers is, therefore, to maintain price competitiveness while ensuring high quality and innovative products.
Limited customer knowledge about a range of technologies has meant that purchasing decisions are usually based on price rather than on value. This, in turn, has allowed low quality products to penetrate the market, particularly in the industrial and commercial customer segments where customers tend to have a poor understanding of CCTV technologies and often regard investments in security systems as 'grudge' purchases.
"Education and training for end users should be regarded by manufacturers as an investment instead of as a cost since it is likely to provide some long-term advantages to the industry," advises Frost & Sullivan Industry Analyst, Jose Melero. "It could act as a platform for manufacturers to advertise their own products, making end users and installers aware of the true value of good technology and also to counter their leaning toward cheap products and bad technology."
The US$1.6 billion European market for CCTV equipment - including IP and analogue cameras, digital video recorders (DVR) and videocassette recorders (VCRs) - is set to generate US$2.09 billion in 2010. Both the digital and analogue markets are expected to expand but the market for digital equipment is forecast to experience more rapid growth rates.
At an estimated compound annual growth rate of 12.4 per cent over the 2003 to 2010 period, the DVR segment is projected to enjoy particularly strong growth. By 2010, this segment is expected to account for nearly 18.4 per cent of the total CCTV revenue in Europe. Supported by the widening deployment of analogue cameras in new installations, the analogue equipment segment is expected to continue as the largest revenue-generating sector, contributing an impressive $1.36 billion to total market revenues in 2010.
In contrast, IP cameras are projected to grow at a disappointing annual average of 5.8 per cent over 2003 to 2010 while the highly commoditised VCR segment is set to be phased out completely.
Major revenue opportunities in the mature regional markets of the United Kingdom (currently the largest CCTV market in Europe), France and Germany are anticipated to exist in upgrading existing installed technology. Italy, Benelux and Iberia are also expected to gain in regional importance with the Iberian market, in particular, significantly boosting its revenue contribution.
As companies move to strengthen market share through offering a more diverse range of security systems - in particular complete CCTV security solutions including both image capture and recording - the trend of market consolidation is set to continue.
Adds Mr. Melero, "Moreover, the increasing demand to integrate all the components of a security system is forcing companies specialising in a particular technology to sign partnerships with system integrators or companies able to offer complete solutions in order to survive in an increasingly competitive market."
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