Market concentration in the video surveillance industry really took hold in 2013. While there have been many acquisitions in this sector, that’s not the only factor causing market share growth among the top 15 video surveillance equipment suppliers, says Niall Jenkins, consulting manager, building technologies, IHS Markit.
In a recent research note based on the IHS Markit’s Video Surveillance Intelligence Service, Jenkins explains:
“Supply was – and is – becoming more concentrated, but it was not primarily the result of the many acquisitions the industry has experienced in recent years. As significant as they might be to the future of the industry, the acquisitions of Axis Communications and Milestone Systems by Japanese multi-national company, Canon, had little effect on the combined revenue share of leading vendors. In fact, the organic revenue growth of Chinese supplier, Hikvision, had more of an effect on making supply more concentrated in 2015. Despite the increase in merger and acquisition activity, increased supply concentration has been caused by companies taking market share from competitors, rather than by acquiring it through mergers.”
According to the latest annual market share analysis from IHS Markit, 11 of the same companies have remained in the top 15 ranking of video-surveillance equipment suppliers from 2010 to 2015. “The companies gaining market share are no longer the new kids on the block, they are incumbents and leaders in the market,” says Jenkins.
He goes on to describe changes in the marketplace for video surveillance equipment: “The established realities of the market are also changing, as best-of-breed product suppliers are being challenged by solution providers offering pre-integrated products. Integrators are increasingly leveraging single-vendor solutions to reduce installation costs and focus on the more profitable service and maintenance contracts.”
What’s next for the video surveillance market? “In price-sensitive markets, like the retail and commercial sectors, price is king and margins are low. Western vendors are exiting these markets, unsure of how to make the margins necessary to sustain their businesses. The high-end value-added markets, where functionality, reliability and performance are critical, are getting crowded. This is the battleground where the majority of video surveillance equipment vendors will either triumph or exit the market altogether,” Jenkins concludes.