We are witnessing the evolution of a new market, right before our very eyes. That market, video surveillance, is one that has not been disintermediated in over three decades.
Despite the post-9/11 public's heightened awareness to security issues, analog CCTV is still the technology largely provided by legacy vendors. The irony of the next-generation video analytics market - which is tipped for major growth in the coming years - is that, just as legacy video surveillance systems do not allow for realtime analysis and alert response, the majority of venture capital investors are not recognising and reacting fast enough to the right investment opportunities.
This is unfortunate because the market is exploding as both the public and private sectors, including the enterprise, begin to understand the potential value of video analytics. There are an estimated 80-100 million surveillance cameras worldwide, most of them 'dumb' cameras in need of video intelligence technology to smarten them up and improve their performance.
Frost and Sullivan estimates that the video surveillance software market will expand at a compound annual growth rate (CAGR) of 25% over the next six years and will reach $670,7 million annually by 2011. UK-based IMS Research states that the world market for video analytics software is expected to increase from its current level of $67,7 million to $839,2 million in 2009, at a 65,5% CAGR.
Still, the questions remain: given today's interest in increased security within both the public and private sectors and the advent of video analytics, why has market growth been stunted for almost four decades? And how much longer will investors continue to put money in the wrong direction of costly, error-prone first-generation video analytics, rather than in digital, next-generation enterprise-grade video content analytics (VCA), particularly when it is next generation VCA that is attracting all the attention from the end use customer community?
The answer to the first question requires a bit of historical background. From the early '60s through the early '90s, video surveillance consisted primarily of CCTV being watched by human operators on multiple monitors, while simultaneously being recorded on analog tapes for historical backup and forensic purposes. Considered revolutionary in its day, two main problems quickly became apparent with CCTV video surveillance. First, studies proved repeatedly that humans cannot watch multiple TV monitors with comprehension for more than 20 minutes per shift. And second, the footage was forensic in nature: CCTV provided hours of taped records, but did not have the capabilities to analyse them in realtime or to trigger event alarms.
In the early '90s, video intelligence evolved to meet these two problems. Originally a venue for research labs, government and academia, 'computer vision', as video analytics was first called, evolved out of artificial intelligence research. The initial commercial offerings by first generation video analytics venders were based on video motion detection (VMD) algorithms developed by defence agencies. All of these early attempts were costly, required large amounts of hardware and bandwidth and, unfortunately, delivered extremely high false alarm rates and nuisance alarm rates (FAR/NAR).
9/11 caught everyone by surprise, including the venture capital community, which was just becoming aware of the need for video analytics in the defence and enterprise markets. The post-9/11 era brought swift government investment and some venture capital into first generation video analytics, meaning products that could detect abandoned objects, human intrusion of restricted areas, stopped cars, etc, - all benefits not provided by legacy CCTV video surveillance systems.
Like their earlier VMD cousins, today's first generation video analytics architecture requires costly hardware, cameras each with servers attached to one or multiple cameras in the field, plus the fact that they consume prohibitively large amounts of bandwidth. In addition, customers and vendors have found first generation video analytic solutions to be complex and error-prone, specifically, the same old problems of low probability of detection (PD), high FAR/NAR, and system crashes.
Another major problem also emerged. In the traditional organisational structure of enterprise and government, physical security is handled by one department and IT is handled by another. Today, it has become unclear who within the organisation is responsible for management and support of new systems that require both physical security experience and IT network expertise. Unfortunately, due to these problems, today's video analytics marketplace remains frustrated, while demand continues to soar. Consequently, there is no established leader in an anaemically penetrated marketplace that is anxiously awaiting a low-cost, low bandwidth, error-free standard.
It is our belief that the security industry needs a completely new approach - and that the next-generation technology leader will be the one to set the industry standard. Given the worldwide need to secure the public and private sector from the threat of terrorism, the time has come for a next generation enterprise-grade video analytics solution that overcomes all of the above-mentioned problems. One that is cost effective, but more to the point, one that is field-tested for reliability, low bandwidth enabled, interoperable and completely scalable. Most importantly, this digital architecture already exists and has been successfully used worldwide since 2003. In the case of Agent VI, it is an innovative image processing architecture from the worlds of IT and artificial intelligence that resolves the problems of low PD and high FAR, at a reasonable cost and without bandwidth overload.
The issue of who handles enterprise security is also undergoing a paradigm shift. As protocol solutions move from analog CCTV to digital technology, and as VCA gets employed by enterprise networks, we believe that management of the video security network will be assumed by IT departments. This shift is inevitable - while today's physical security departments staffers do not necessarily understand Internet protocol (IP) technology, the coming generation of Web-savvy personnel does understand, and will either give control of surveillance over to IT departments, or join forces with the IT departments.
Enterprise management cannot help but support such measures. Given that security is a multitrillion dollar global business, of which hundreds of billions are spent annually on security personnel, there is tremendous incentive to become more efficient and effective.
According to Frost & Sullivan: "Network-based systems are expected to completely replace analog and hybrid (analog video capture devices with digital storage devices) systems by 2015-2016, providing huge opportunities for video management software."
As investors know, it is hard to find IT industries that have not been disintermediated, and this one has not. A new, all-digital approach to video intelligence architecture is the next step for video analytics. In networks, a video alert carried over IP will centralise service, reduce security personnel and greatly improve response time. I hope my alert to the venture capital community will galvanise investment, increase participation and greatly improve response.
Dieter Kondek is the CEO of Agent Video Intelligence.
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