The global value of IP camera sales is close to 50% of total CCTV cameras sold worldwide, but they are not plug and play…

December 19th, 2013 by Frank Crouwel

Close to the tipping point

During 2014, the global value of IP camera sales is set to reach the tipping point when compared with analogue CCTV cameras, according to the leading analyst covering the global surveillance and analytics market IHS (formerly IMS Research).  Jon Cropley, IHS’ lead analyst covering the surveillance market explains:

“The video surveillance equipment markets in EMEA and the Americas have already reached a ‘tipping point’ where revenues from network video surveillance equipment exceed those from analogue equipment. At a global level this is not forecast to occur until 2014 due to the continued growth of the market for analogue equipment in Asia.”

IHS’ global report on the video surveillance market based on 2013 sales (which should be out by June 2014) may even reveal that the global ‘value tipping point’ has already arrived – spurred on by rapid migration to IP video in China and the rest of the Far East.

Network camera unit sales only 16%

But interestingly IHS’ figures also reveal we have a very long way to go in terms of camera unit parity. 2012’s numbers indicate that only 16% of all surveillance cameras sold worldwide were network cameras. So how are relatively low unit sales delivering 50%+ of combined camera revenues? It is clear that analogue CCTV camera prices have been falling, due to their commoditised nature, while their network-based equivalents are actually being packed with increasingly advanced features, including ever growing processing power, continually improving imaging technologies, on-board storage capacity and video analytics, adding more and more value (and sometimes price) into camera devices.

A significant and growing minority are now buying these more advanced devices. The only question is why has it taken IP cameras so long to reach this tipping point when the digital video recording tipping point was reached a full 8 years ago?

Legacy migration

Clearly part of the problem has been the existence of so much legacy analogue-based kit. The UK alone deployed more than three million analogue CCTV cameras, many of them funded by central Government back in the 1980s and early 1990s. An industry grew to install and maintain these systems and if well maintained it proved reliable and effective. The same thing went on in many other countries including China, North America and France. Naturally there has been a reluctance to write off such heavy investment in CCTV systems.

At the same time there has been a skills gap within the installer-base, with the pace of technological development, the rise of server/software-based systems and the complex world of ‘IP networking’ being a challenge for any traditional security installer without the appropriate background or expertise.

It is also evident that countries without those legacy issues are setting the pace in terms of IP video adoption. The Scandinavian countries have been streets ahead and the tipping point from analogue to IP in these markets was reached years ago.

In the UK, a hybrid model found favour over the last 10 years where existing analogue CCTV camera systems have been migrated to IP by means of video encoders and any new camera additions have been IP models. For getting a more accurate picture of the penetration of IP within the UK camera surveillance market it would be interesting to find out how many video encoder channels have actually been deployed. Without some reliable information on this it leaves our original question partly unanswered.

Top 10 drivers for IP video adoption

But all the while network camera sales have been growing at 20-30% year on year, traditional CCTV camera sales has remained in single digits. So the tide has definitely begun to turn towards network video. There is no doubt lots of drivers have been moving the market in the direction of IP video. We’ve created a list of the top 10 over the last 10 years that have brought the market to the oft-heralded tipping point for IP cameras:

1. 1. The advent of HD and multi-megapixel resolution meant that the best resolutions were offered by IP cameras
2. 2. Improvements in compression (most notably the developments in H.264) meant that network bandwidth usage became more manageable, coinciding with wider adoption of high speed broadband and now fibre-based ‘superfast’ broadband in the UK and elsewhere.
3. 3. Power over Ethernet standards – advancement of standards for delivering power via a standard Ethernet cable (CAT5) reduced new camera installation costs and enabled power to be delivered to even the most power hungry cameras with infrared, heating and fans inside housings of external cameras, all via the same Ethernet cable that carries the video streams from the camera
4. 4. The outpouring of new functionality largely from the IP camp – wider adoption of thermal imaging, video analytics and intelligence, improved sensor sensitivity and new image enhancement technologies, edge-based storage, remote and mobile access, 360 degree vision cameras with de-warping and much more
5. 5. Development of industry standards to aid interoperability between different network cameras and other associated security products, most notably video management systems and access control equipment. This setting of standards has definitely cleared one key barrier to the adoption of network cameras. They are no longer locking the customer into a single brand solution. So is it possible to easily mix and match camera providers with open architected VMS providers like Milestone. Integration with access control systems, EPOS solutions and ANPR has all been made possible, whilst there are many application developers offering bespoke solutions in niche markets.
6. 6. An easy migration path – early focus by camera manufacturers and video transmission vendors like Veracity meant that the transition to IP from analogue CCTV systems could be as quick as the end-user wanted. So the UK’s early investment in CCTV cameras has not been lost as analogue-based systems have been brought onto the network by an array of video encoders and media converters. Products have enabled power to be transmitted over legacy coax cabling for example. Hybrid systems thus have become a significant part of the UK surveillance landscape. The customer has thus been left in charge of making the switch when they have a compelling reason for doing so.
7. 7. The development of cameras and camera form factors designed to meet specific customer requirements and focus on early adopter market needs, most notably transport (motorways, trains and buses), retail, casinos and stadiums
8. 8. Budgets have moved from security and facility managers to IT departments in client organisations with IT and network managers being the driving force of wider IP convergence within technology-aware companies.
9. 9. IP camera vendors have applied well-worn sales partner models which enabled the whole IT industry to grow so significantly in the last 30 or so years. They’ve invested heavily in training and certification programmes to stimulate traditional security installers and IT integrators alike to get into network video. They’ve also provided many online design tools, calculators and an array of technical guides and collateral to assist installers. They educated an army of partners to spread the word and sell the benefits of migration to IP. A process that is still ongoing.
10. 10. Finally, linked to point 5 and 8, it has become much easier to integrate network cameras with other IP-based applications as much of the business application world has gone IP and IP convergence has become widespread. Nearly every important business application is networked today. Applications and devices can pass data to each other over the corporate network. That combined data equals intelligence which delivers real business value and potentially greater profitability and certainly better customer service. This interaction opens up a world of opportunity so that your surveillance camera in a store goes from being a device focused purely on catching thieves and reducing shrinkage to becoming the device that alerts the store manager on his smart phone when one of the company’s most valuable customers has just walked into their store. IP cameras are quite simply delivering much more value today and they are doing it more easily than analogue-based CCTV cameras.

Legacy forces still at work

However despite all these developments over the last 10 years many traditional security installers have opted to continue only offering analogue CCTV systems. This approach is absolutely fine as long as customers are correctly informed of their choices.

In client organisations where security or facility managers are in the driving seat, analogue installers have well-established relations, a listening ear and are doing fine. The high percentage of analogue camera unit sales still happening today proves this. But where a network or IT manager is the driver of the project, installers are not always sufficiently equipped to deliver what is expected.

Network managers are demanding, and rightly so since they are responsible for what is nowadays the critical core infrastructure of any company or organisation. Thus understandably, they don’t let anybody touch their network or put anything on it unless they are fully convinced of their experience, skills and competences.

IP video is not Plug and Play

However despite all these developments we are not operating in a Plug and Play world despite what you might read. We do take issue with the view that one or two trade publications have posited, that network cameras have become Plug and Play and can be configured ‘in less time than it takes to boil a kettle’ (see that issue’s editorial leader column). It is true to say that it has become easier to add an IP camera to a network. There are NVRs that will find IP cameras on the network automatically and assign IP addresses to them without much manual intervention. They come pre-loaded with basic default settings and some systems will happily run out of the box without further ado.

However, without understanding what the installed system will do to a customer’s corporate network (large or small) this is a very risky approach to take. Video data is bandwidth hungry, much more than most other applications that’ll run on a network, introducing the potential risk of flooding a network and causing parts of it to drop.

Therefore IP-based video systems need to be carefully designed, commissioned and managed. This process must be a collaboration between the network manager and the installer. The configuration options are almost endless and offer an enormous amount of flexibility in managing the bandwidth aspect of an installation. Relevant skills and experience are required to do this correctly, including a sound understanding of networking.

In addition to bandwidth management, there are other considerations such as access security, virus protection, data backups and redundancy, failover requirements, server and Windows management in case of using a video management software (such as Milestone). Finally there is the phenomenon that we have dubbed ‘mission creep’, which refers to our experience that the customer organisation will always add more and more users to their video system over time, causing bandwidth issues that need to be managed continually. In short, IP video integration is a skilled area and it should not be preached otherwise.

To sum up

We are reaching the tipping point in terms of revenues being generated by network cameras over traditional CCTV cameras, even if the unit sales are nowhere near this point yet.

Factors leading up to this tipping point include: continuous improvement in technology (HD, H.264, PoE, open platform standards etc) and the advents of the intelligent network camera with in-built video analytics and accessibility from remote locations and via mobiles have played their part.

A focus on interoperability between video surveillance devices has dovetailed with the migration of most business applications onto the network, creating massive scope of integration between business operations systems and passing back previously unconsidered business advantages. Access to higher speed networks and broadband has also helped make wider network video adoption possible.

Despite all these developments, network cameras are not plug and play devices and correct system and network configuration is not a walk in the park. Security installers getting into network video surveillance still need to acquire networking skills or team up with a network video specialist to engage with this growing market profitably.