Memoori’s recently published report on the physical security industry shows that video surveillance product sales reached $19.15 billion in 2019 and could reach $35.82 billion by 2024.
This growth is the highest we have ever forecast and is driven by a number of factors, particularly the sales of AI (artificial intelligence) video analytics software now entering the commercial market. Video Surveillance-as-a-Service (VSaaS) is now growing at around 15% per annum and the impact of the IoT has yet to be fully realized. IP video cameras could become one of the most sensors in commercial and industrial buildings.
We have given a separate forecast for AI video analytics because of the major impact it will have over the next five years and beyond. We forecast that its contribution will boost video surveillance sales contributing some $3.5 billion to 2024. It will be the main game changer over the next 10 years. We expect that China will take more than 50% of the world market for AI video analytics software by 2024, but privacy issues in Western markets could hold back the rate of growth. Traditional video surveillance companies naturally see AI analytics as a feature to run off their existing products, offering a way to differentiate themselves.
Cameras with embedded video analytics, such as motion, face, and object detection, analyze image data at the point of capture and can effectively eliminate the need to transmit video and data to a central server. This enables very efficient use of both transmission and recording bandwidth.
There is much evidence in 2019 that in the physical security business, cloud services, specifically VSaaS, has broken off its niche market shackles and its capability and performance value are no longer doubted. Demand has grown significantly this year and we forecast that over the next five years it will deliver a compound annual growth rate (CAGR) of no less than 12%.
In the next few years as the Building Internet of Things (BIoT) becomes a reality, IP cameras will be directly connected with these systems and that will present a myriad of opportunities for them to contribute to solving other problems not necessarily associated with security.
Integration within physical security is now a common requirement and IT convergence is almost a given in the enterprise market. The BIoT will connect services in the building, minimizing duplication, reducing hardware and software costs and IP cameras will become an important sensors in buildings. This will change the routes to market and introduce new players into the business.
Background economics and trading conditions have remained fairly static this year but more innovative products that have delivered better performing systems have more than compensated for this and quality brands have increased their share of the business as a result. We had expected for the last two years that mergers and acquisitions by non-Chinese companies would have delivered some help in building up scale but nothing of any great consequence has happened through acquisition.
Over the last eight years there has also been a major change in the geographic distribution of video surveillance product sales. Asia has delivered the highest rate of growth, increasing its market share every year and there is still a massive latent demand waiting to be exploited. The main driver of this growth is China where the penetration is still less than a half of that in North America and well before this latent business has been mined the Chinese market will be more than twice the size of North America.
For more information about our report, “The Physical Security Business 2019 to 2024,” click here.
