How the recession impacts video surveillance

[Editor's note: John Honovich publishes this and other information on network video at IPVideoMarket.info.]

The video surveillance market will take a beating regardless of the hope that security is recession-proof. This report reviews the key reasons and impacts of the recession with concluding recommendations

• This recession is different from the last one


• The debt market collapse will make users delay new purchases


• Megapixel cameras will fare the best


• DVRs will continue to decline slowly


• A shakeout of NVR/IP Video software companies will occur


• Video analytics will fare the worst

Different from Last Recession

In the last recession, the video surveillance market was held up by (1) the introduction of DVRs and (2) the global war on terrorism.

At the beginning of the decade, most users had no video recording and the ones that did mostly had VCRs. The value generation of going from nothing or a VCR to a DVR was very high, especially because it eliminated many manual tasks required for a VCR. The move from DVR to NVR does not provide the same value as that of nothing/VCR to DVRs. As such, you should not reasonably expect the same motivation by customers to move to NVRs in this recession.

Secondly, the global war on terrorism boosted the last recession but cannot be expected to repeat now. For the past 7 years, both government and private sectors (think utilities, shipping companies, etc.) have funded an incredible amount of projects for homeland security. The US will to fund and fight a war on terrorism clearly seems on the way down. It is more likely that funding for video surveillance goes down than it goes up, especially given the bailouts the government will be engaged in for the next few years.

Delaying Purchases

In recessions, people delay buying new high priced items. Given that so many people already have video systems, it is easy for them to keep them a little longer. Yes, that DVR or analog camera is not the latest or greatest but it works for the most part. It is entirely sensible for organizations to delay.

The drive to delay will be enhanced by the tightening of the debt market. Stricter standards will make it harder for companies to obtain debt funding. Companies will rationally respond by eliminating or delaying new capital projects like video surveillance systems.