Roundtable: Video surveillance trends to watch in 2017

Dec. 27, 2016
Experts discuss what lies in store for the industry in the New Year

The video surveillance landscape has changed significantly in recent years from both a technology and business perspective. While high-definition network cameras have become cheaper and more plentiful in recent years – a positive for many end-users – it has also resulted in increasing commoditization of the video hardware market and subsequently driven margins down for manufacturers and their channel partners. Additionally, various mergers and acquisitions have incrementally reduced competition in the industry which has led to a smaller number of companies holding a greater share of the market.

Perhaps the most worrisome development to impact the market of late has been the role surveillance cameras have played in distributed denial of service (DDoS) attacks. Cybersecurity and video surveillance professionals alike have talked about the dangers posed by unsecured cameras for some time but those fears really manifested themselves earlier this fall when botnets leveraging large numbers of IP cameras took down the networks of DNS services provider Dyn and cybersecurity journalist Brian Krebs in separate incidents.        

So, what trends await the industry in 2017? recently spoke with a number of industry analysts and subject matter experts to get their take on how video surveillance technology will evolve in the new year, and how ongoing issues will continue to affect the industry moving forward.

Meet the Panel

  • Jon Cropley, principal analyst, video surveillance, IHS Markit
  • Josh Woodhouse, senior market analyst, video surveillance, IHS Markit
  • Fredrik Nilsson, vice president, Americas, Axis Communications
  • Tom Cook, vice president of sales, Hanwha Techwin America
  • Ron Grinfeld, global vertical marketing manager, FLIR Security
  • Francis Lachance, director, video and appliances product group, Genetec
  • Tim Palmquist, vice president, Americas, Milestone Systems
  • Sharad Shekhar, CEO, Pelco
  • Jennifer Hackenburg, senior product marketing manager, Dahua Technology USA

What do think will be the most significant development with regards to video surveillance technology in 2017?

Cropley: Many trends are ongoing, such as the price erosion of hardware, bandwidth optimization and improved resolution. I think there will be an increasing focus on software in 2017 and beyond – whether it be deep learning for video analytics or advances in video management, there seems to be a recognition that improvements in video surveillance system functionality will be driven by software.

Nilsson: In 2017 we’ll see continued improvements in image quality, built-in intelligence and cost efficiency. The market is getting closer to full IP, which is also showing higher and higher penetration in small and mid-size systems. In this space, ease of design, install and operation will continue to be important.

Cook: Expansion of the multi-sensor and multi-directional cameras in many new configurations. We have been seeing many new manufacturers enter into the market segment – which was primarily dominated by one vendor ­­– and we will see full product lines in many new configurations, larger megapixel and smaller remote products.

Grinfeld: The past few years has seen a continuous commoditization of the traditional video surveillance offerings, especially the hardware elements – IP cameras and recorder appliances. As a result, previous “enterprise-class” products and technologies are penetrating smaller and lower-tier markets to the point where many of yesterday’s hottest trends are now available with products offered online for homes and private use. This forces the market’s leading vendors to on alternative offerings. New developments will include hardware – hybrid/ multi-sensor cameras, security drones, security robots and smart wearable cameras – as well as software with a focus on synergies and convergence points with other, non-security platforms.  

Lachance: We expect 2017 to see a continued rise in the importance of subscription and managed services, with end-users placing emphasis on term, or outcome-based ownership vs. perpetual licenses.  In addition, moving more data and computing to the cloud will enable organizations to transfer a big piece of their cybersecurity risk to companies who have global teams dedicated to maintaining data security. Organizations will also put more focus on establishing rigorous risk assessment and product lifecycle programs to ensure they have the latest technology available to counter cyber risks. End-users will then be much more demanding on manufacturers and system integrators regarding network-based solutions.

Palmquist: Companies that can “walk the talk” of the open platform will rise to the top. Many sophisticated and value-rich features exist today and are in development for tomorrow, so to be truly innovative, manufacturers must embrace their business model with focus equal to their technical innovation model. We are at a crossroads now in this industry: platforms are the building blocks for the innovation of today and tomorrow. Innovation in and of itself may very easily (and wrongly) be delivered without a platform – and that is a short-term vision.

Shekhar: The hot topic is the interconnectivity of devices and how each one is getting smarter to make our lives more efficient. The security space has been playing in this area since the inception of this concept, putting smart readers in access control and equipping surveillance cameras or VMS systems with more capabilities by integrating these devices and rationalizing them into a systemized representation so that people can be more aware of what’s going on. This will drive many product selection decisions in 2017.

Cybersecurity issues surrounding cameras and other surveillance equipment has obviously taken center stage in 2016 with the recent DDoS attacks launched using the Mirai botnet. What does the industry need to do to address this problem and do you foresee it continuing to be an issue moving forward?

Woodhouse: Vendors need to work together to ensure that the general public’s perception of the security of video surveillance systems is not further eroded. If video surveillance systems are perceived to be vulnerable to attack, this will negatively affect demand. The seriousness of this issue should not be underestimated. We expect the industry as a whole to take a more proactive approach to cybersecurity this year – better end-user/integrator education, best practice guides, reference architectures and certifications will be increasingly used by video surveillance vendors.  

Nilsson: Any device that is connected to a network needs to comply with the cyber policies of the end-customer. Cyber-hardened solutions definitely involve the technology, but you also need to ensure that firmware is kept updated. Additionally, having the ability to quickly update the system if vulnerabilities are found is of utmost importance. Cameras that are OEM’d, (i.e. not developed in-house by a manufacturer), will typically take longer to get updated firmware and therefore present a bigger risk.

Cook: We as manufacturers must take the lead and educate the industry overall. We have and will continue to have BICSI and ESA-certified courses.  All integrators should expect the manufacturer to have supporting  documentation to provide the end-user and a full cyber-hardening guide to assist in developing best practices in installing products on the end-user’s network.

Grinfeld: Cyber vulnerabilities in video surveillance are not just a hot topic – they have become one of the major concerns in the industry. In many cases, the attacker is looking to exploit breaches in the security system in order to penetrate the corporate network to steal or manipulate data. Our industry needs to set clear goals for cybersecurity, establish  standards and qualifiers, and develop methods to regulate them. This will not only provide a mandatory benchmark for products, but will also drive the different players to work together in a joint effort fighting against cyber criminals.

Lachance: Every player in the physical security market, from manufacturers, to consultants, integrators and end-users, will have a part to play. The challenge is going to be one of education: We will need to inform customers on what is insecure, teach them how to void pitfalls and how to protect themselves, and show them how to better manage the risk of deploying non-secure security devices and systems. 2017 will also be a year of awareness about cyber accountability. The burden of responsibility needs to rest with the people who make us think we are secure when in fact we are not. As a result, we expect a greater demand for cybersecurity malpractice insurance in the physical security space. This will become “table stakes” for integrators who are working on projects in critical infrastructure, large-scale enterprise and government projects.

Palmquist: A good way to get an overview of the cybersecurity situation is to read the free Microsoft Security Intelligence Report issued twice a year. Milestone is a Microsoft partner ­ because our software is Windows-based, we therefore adhere to the Microsoft guidelines for security. Milestone has also published a VMS Hardening Guide that takes into account all the physical security devices that must also be considered in a surveillance network.

Shekhar: Manufacturers and other industry participants have long looked at cybersecurity from a cost perspective, but if you look at it from a liability perspective, the economics of the investments look very different. More and more manufacturers – including Pelco – now look at it this way. The industry will see an increased investment because of this perspective. Manufacturers must take DDoS risks into account when designing hardware and software updates, and the industry must look toward strengthening password requirements, incorporating data encryption, and educating integrators and end-users on how to put protocols in place to protect the data.

Hackenburg: The industry is seeing cybersecurity and physical security are becoming of equal concern, especially with the growth of Internet of Things (IoT) devices. With the Mirai botnet attacks, the most vulnerable devices were those running outdated firmware and/or were using default usernames and passwords. One way to prevent future attacks is for dealers, installers and end-users to stay up-to-date on cybersecurity best practices and take basic precautions to help keep their devices as secure as possible. Dahua engages in rigorous testing of all products in order to mitigate cyber risks before they occur.

With the proliferation of high-definition cameras and the advent of 4K, there has also been a renewed focus on bandwidth optimization. What do you believe 2017 will hold for H.265 and the adoption of other bandwidth-saving technologies?

Woodhouse: The additional processing power required for H.265 and VMS compatibility has so far lessened its impact. Advances in the latest deep learning analytics may provide another method of bandwidth optimization ­– as the analytics become more accurate, cameras can become “smarter” at selecting which data to send through the network. As we have seen with some VMS, data management software will start to be integrated into cameras, further adding flexibility to storage, meaning data stored at the edge, centrally and/or the cloud can be accessed as a single volume.

Nilsson: H.264 with smart codecs is still the dominant compression technology, and more efficient than some of the early H.265 implementations. H.265 provides the most value in higher resolutions, and we can definitely expect to see continued positioning in the compression space during 2017 especially with H.265, even if it has yet to become a dominant codec in 2017.

Cook: This is happening and we (already) have a complete H.265 solution. Most of our larger VMS partners will support H.265 in their next software release in Q1 or Q2 in 2017 and there will be major announcement for most companies at ISC West.  The savings can be up to 80 percent depending on the megapixel size and amount of movement.

Grinfeld: H.265 brings both value and cost. On one hand it enables greater compression efficiency but on the other it requires greater computing resources from cameras and other edge devices that are utilizing it. We expect to start seeing a market transition during 2017, but it could take another year or two until we reach a point where H.265 becomes a market standard.

Lachance: There are benefits to having more pixels in security and we are already starting to see the introduction of H.265-compliant high-resolution 4K security cameras. 4K cameras will only take off with H.265, just like HD and Full HD took off with H.264. While H.265 promises to reduce bandwidth utilization for the same video quality as its predecessor H.264, it also leads to more complex encoding and decoding requiring greater CPU/GPU (Central Processing Unit/Graphics Processing Unit) power, which can cause additional expense to update computing hardware. Leveraging as intelligently as possible the hardware technology coming from the video card’s GPU will be a must for the adoption of H.265 in order to provide the same level of decoding capabilities as with H.264. If not, customers will not see the gain in making the transition to H.265. 

Hackenburg: In 2017, manufacturers will attempt to differentiate their product offerings by promoting their own optimized H.264 smart codec to deliver a higher savings on bandwidth. Within the next 10 months, H.265/HEVC will become more widespread as manufacturers begin to implement a dual H.264/H.265 codec to provide customers with the peace of mind that their system is future-proof.  

With the increasing commoditization of video surveillance hardware, how will companies seek to differentiate themselves in terms of feature sets and ROI moving into 2017 and beyond?

Cropley: Video surveillance equipment vendors will increasingly offer features to improve image quality like WDR, improved frame-rate and advanced low-light performance. They will also increasingly offer other features that improve product utility like improved analytics, onboard audio and improved compression. However, they will also focus on non-product features like offering solutions tailored to specific verticals, and professional services to assist with technical support, system design, solution validation and cybersecurity.  

Nilsson: Commoditization will help drive consolidation, but as a manufacturer, there are many other values than the cost of a camera. For example, quality and service will be important, as many cameras are operational for 5 to 10 years and the total cost of ownership goes well beyond the purchase price. We also believe that shared values in areas such as sustainability and cybersecurity will be important aspects, especially in the enterprise space. The most important thing for an end-customer is to find a robust solution with the best TCO.

Cook: There will always be a low-end camera market – whether it is analog or IP – but most leading video manufacturers are introducing customer-demanded product such as 4K or multi-sensor cameras and other unique products that will continue to advance our industry on features and functions.

Grinfeld: Solution selling is definitely one of the most immediate reactions. In addition, we are likely to see an increased investment in software development in areas including smart forensics, non-traditional analytics and other alternative ROI. On the hardware side, we will likely be seeing new developments including better and smarter image processing, multiple imagers, unique form factors and others.

Lachance: As hardware is getting more and more commoditized, manufacturers will definitely have to be creative in order to differentiate themselves. We will most probably see a shift (which has already started) in the industry where hardware manufacturers will become solution providers and start focusing on non-commoditizing parts of the industry. There is still some room in 2017 for camera manufacturers to differentiate themselves on the edge device side – especially with the rise of cybersecurity threats.

Palmquist: Products and features can be commoditized; however, platforms and a vibrant community of innovative and complementary solutions will almost always endure, add value and return the best overall long-term ROI. Commoditization is a trap for the linear product and we can see some companies – by their own business and go-to-market models – actually “self-commoditize” and harm their financial futures. If a value proposition message starts with the words “products” and “features” then they may already be on their way down that road.

Shekhar: To combat commoditization, companies will have to restructure and make their supply chains more efficient. They will have to consolidate and build scale to reduce costs and protect margins. Focusing on segmentation and differentiation is another important strategy, but this focus cannot be shallow if it is to deliver meaningful value to the customer. We are seeing a shift in marketing focus to the development of core strategies that transform the innermost workings of a company, allowing manufacturers to target specific market requirements by learning what the end-user truly wants in a security and surveillance solution.