Perhaps not since the market’s transition from analog to IP has the video surveillance industry found itself in such a state of flux. While the number of camera deployments continues to grow steadily with each passing year, the technology and the companies that manufacture it are being influenced by what seems like an ever-growing number of trends and changing market dynamics.
After being widely panned as over-hyped and unreliable at one point in time, video analytics – powered by artificial intelligence (AI) platforms – are now widely regarded as the technology that will drive the technology and its applications across all industries forward. On the other hand, the commoditization of video hardware and the subsequent “race to the bottom” that has occurred with regards to pricing has also resulted in reduced margins and declining revenues for many suppliers. There are also growing concerns about cybersecurity within the industry and what companies are doing to better protect their products.
What does 2018 hold in store for the industry? SecurityInfoWatch.com interviewed a number of industry experts to get their take:
- Andrew Elvish, VP, Genetec
- Jennifer Hackenburg, Senior Product Marketing Manager, Dahua Technology USA
- Jeffrey He, President, Hikvision USA Inc. and Hikvision Canada Inc.
- Kichul Kim, President, Hanwha Techwin America
- Bret McGowan, SVP of sales and marketing, Vicon
- Fredrik Nilsson, VP Americas, Axis Communications
- Tim Palmquist, VP Americas, Milestone Systems
What will be the most important trend in the video surveillance industry in 2018?
Palmquist: As our industry is maturing and cyber threats are now a daily conversation, there is no more important consideration than cybersecurity. Buying well-made products related to IP video security and installing them in a responsible, secure manner should be a primary consideration.
Nilsson: The Internet of Things will continue to dominate the security industry as we accelerate convergence and integration of IP-based systems such as access control, audio and intercoms with network video solutions. Collecting, transporting and synthesizing the data generated by all these systems will open more opportunity for Big Data and storage companies to offer cloud services and Security as a Service (SaaS) support.
McGowan: There will be further price erosion in the camera market affecting the revenue and margins that many companies have depended on to support their businesses. This will be true for the distribution and integration channels, as well as for manufacturers.
Hackenburg: Artificial intelligence is one of the fastest growing segments trending for video surveillance. The advanced algorithms of Deep Learning mean that devices can be trained to perform hierarchical data extraction and continually adapt over time, even in a complicated environment.
Kim: 2018 will be a big year for more powerful multi-sensor/multi-directional cameras. These cameras will be more flexible with features such as 60 fps, 150 dB wide dynamic range and H.265 compression.
Elvish: There will be a lot more focus on privacy protection and compliance. People want to feel safe, but not watched. This is where privacy protection and encryption technology play a role in ensuring that security professionals have enough information to be able to do their job while protecting the privacy of the public.
The resurgence of video analytics and the potential of AI and Deep Learning platforms are shaping the long-term aspects of the industry, but what will be their impact in the short term?
Nilsson: Today, many physical and cybersecurity applications are built on Deep Learning platforms that can be auto-tuned to trigger alerts based on previous cyber intrusions and alarm detection behaviors. In the near term, we’re seeing a push for more sophisticated video analytics to extract quantifiable metrics and meaningful business intelligence from images and metadata.
Kim: Analytics on the edge will continue to evolve as we further enable cameras and VMS systems to make better choices on what is recorded and how it is recorded. The ability to dynamically change frame rates and exposure settings based on analytics or other conditions is an example of what people can already do today. Technologies such as Deep Learning and Convolutional Neural Networks (CNN) will take camera analytics to the next level.
Palmquist: AI may prove to be the ultimate delivery on the traditional video analytics promise. In the short term, expect to see AI elements make their way into traditional video analytics and synopsis solutions. GPU processing is paving the way for more and more innovation in machine learning that will simply eclipse the more traditional developments we’ve seen over the last decade.
He: The enhancement of video analytics using Deep Learning technology will provide end-users with reliable and accurate recognition of subjects and behaviors that warrant real alarms or further forensic analysis. By eliminating objects or activities in a video scene that cause false alarms, users will be able to much more effectively manage security. In addition, specific applications for detection and recognition of humans, faces and vehicles will benefit from improved algorithms that exceed 90 percent accuracy.
Elvish: There is a greater demand on organizations and institutions to not only make sense of an increasing array of data from sensors and connected devices, but to take meaningful and smart action on this data. Software that helps organizations build and activate this type of operational resiliency and security intelligence will lead the way in 2018.
McGowan: Deep Learning will have very little impact, but analytics is already being marketed hard as a differentiator by a few companies. In an effort to avoid the race to the bottom, these companies are trying to inject more usable analytics into their solutions. The ultimate goal is to make the operators’ job easier, but from what I’ve seen so far, in many cases they’re only complicating the process for both installers and end-users.
Hackenburg: Short term, security functions will increasingly become more automated, which will create business efficiencies across the enterprise. Enterprise security will begin to see the benefits of AI, and discussions will begin to center around how to increase its use to mitigate risks.
With VMS solutions evolving to serve as the central backbone of many security systems, is the software essentially morphing into more of a sensory hodgepodge of big data analytics, situational awareness mechanisms and ERM tools? How do you see VMS progressing moving forward?
Elvish: The evolution of the traditional VMS system is real, but I wouldn’t call it a hodgepodge. There is certainly a trend towards greater unification of systems that go beyond the traditional role of a security system. Working from one pane of glass is easier and more efficient for operators.
Palmquist: A lot of R&D now goes into making features in the VMS to help human operators understand what is happening and what has already happened in the properties or operational environment. As VMS evolves, we’ll see R&D investments pivot to making software that informs humans about anomalies or areas of interest, for operators to discover these events automatically. Smarter software will ultimately render a lot of present-day features obsolete.
McGowan: Open standards are facilitating the ability to incorporate many traditional PSIM functions within the VMS platform. We are looking at developing more business-specific solutions that wrap together VMS capabilities with certain analytics and integrations that address the needs of particular vertical end-users. For example, a healthcare solution might incorporate integrations with infant monitoring and nurse call systems with pre-defined functions within the VMS.
He: The evolution of the VMS from a system that only manages video has been going on for quite a while with the integration of other aspects of physical security. It is natural that this evolution will continue to seamlessly integrate any available data source to optimize efficiency of both the security operations as well as business operations with real-time reporting and Deep Learning to further optimize the processes. VMS will move closer to PSIMs and become a better management tool for many users that rely more and more on video.
Nilsson: VMS, like other technology, is definitely evolving. The trend in small and medium-size systems is toward complete solutions from one vendor, with a focus on making the systems easy to design, easy to install and easy to use. With the addition of AI, the systems are also becoming more proactive and expanding beyond their original role as a forensic tool.
Kim: An important evolution for VMS systems is the ability to precisely tailor the correct mix of tools and capabilities that more closely align with an end-user’s goals and budget.
Cybersecurity and protecting network surveillance systems against possible tampering by hackers has also been an area of concern. What developments will we see on this front in 2018?
McGowan: The Industry, as a whole, needs to begin agreeing on its responsibilities and offering solutions that help protect its customers. Standards and accepted practices that make clear the divide between IT network responsibilities and product manufacturers need to be developed for each technology; and manufacturers must do whatever they can to make sure installers are well-trained and certified, so that all network security best practices are followed as systems are deployed and configured.
He: Unfortunately, cybersecurity risks and concerns are not going to abate in 2018.The good news is that there's an increased recognition in our industry of the importance of robust cyber defense. One trend we'll see is manufacturers collaborating with professional security researchers to help secure products. There will be more industry-wide collaboration on cybersecurity education.
Nilsson: To mitigate risk in the IoT ecosystem, all vendors will need to operate off the same cybersecurity playbook. This means that as manufacturers and developers continue hardening their products with stronger cybersecurity features they will also have to consider how introducing those features might impact every other device, application and operation on the network. More manufacturers will be providing management tools to assist integrators and end-users with ongoing maintenance and version control of device firmware and cybersecurity. It is essential for manufacturers to control their own technology in order to expedite upgrading their firmware as soon as new vulnerabilities are discovered.
Hackenburg: The issue of cybersecurity and protecting network surveillance systems will be at the center of every discussion with vendors and existing and new end-user customers. As our industry matures and continues to assess and combat the vulnerabilities of IoT devices, we, as an industry, will need to implement preventative measures and continue to take action against hackers.
Kim: Cybersecurity issues prevalent in our industry are finally receiving the attention they deserve. Because we develop most of the components of our products ourselves, from the camera optics to the chipsets, we are not as reliant on off-the-shelf, potentially vulnerable parts and technology.
Will the product commoditization “race to the bottom” continue in 2018, or will this trend level off a bit?
He: Downward pricing pressure on technology that has been around for a while is a market reality in any industry, but rather than reflecting some sort of cynical “race to the bottom,” I believe more affordable products mean better security for businesses and families. I look at the continued innovation in our industry and see a “race to the top” which will provide more opportunities for our partners and for the security industry as a whole.
Nilsson: Ever since the first network cameras were invented over 20 years ago, we have seen prices continue to drop in much the same ways as in other technology fields. Cameras with similar capabilities are being sold at a lower price than earlier models and next generation, more feature-rich cameras are being sold at yesterday’s price. In the last couple of years, a few high-volume players in the security market have been driving a price war. This has polarized the market. On the one side we have the value players who are focusing on service, support and quality. On the other side we have the budget players whose primary focus is price. This price tag pressure might very well continue in the very entry-level sector of the market, but in enterprise installations it will be less pronounced.
Palmquist: The low end of the market has taken a beating and will continue to get assaulted; but while some competitors have used price as a weapon to take market share, the industry on the whole is still doing well and making money. Quality and stability will always command a premium price. Instead of a race to the bottom, we are seeing the market segmentation flesh out while low, mid and advanced tier products find their natural place.
Hackenburg: There are pros and cons to commoditization in the security industry. While it does mean lower prices and more choices for end-users, it can also mean too many choices. For manufacturers, it forces a constant flow of product innovation, which spurs industry growth and risks that are successfully mitigated for the end-user.
Kim: The race to the bottom is slowing down as cybersecurity concerns posed by low-cost devices continue to be exposed.
Elvish: The so-called race to the bottom took out a lot of players that were fragile. Over the last few years, there has been a certain culling of the industry either through M&A activity or companies that were just unable to continue operations; however, we have certainly seen a slowdown of the race to the bottom with less pressure being placed on the actual price of devices.
2017 was a quiet year for video surveillance on the M&A front. Will that change in 2018?
Kim: The security industry is still very fragmented and as such, there will be more consolidation, acquisitions and partnerships between organizations. Cybersecurity concerns will continue to shine a light on products and infrastructure, changing the way manufacturers and integrators position themselves and their services.
Nilsson: With the increasing migration to IP-based systems and the rapid evolution of technology, manufacturers will face pressure to invest more deeply in R&D to remain relevant. This will force financially strapped or less competitive companies to look for a merger or acquisition partner to remain viable, leave the security market altogether or simply fold. For companies with plenty of money, acquisition may prove a more cost-effective alternative to investing in their own R&D.
Palmquist: There will continue to be consolidation, but the pace of this consolidation is hard to determine. What is more obvious is the segmentation of the brands in the market. It is becoming increasingly clear who the tier one, tier two and tier three players are/will be. Revenue growth year-over-year and growth that exceeds the market are key indicators in understanding which brands are extending their share, which ones are standing still, and which ones are seeing share erode.