Report: Global market for physical security equipment to reach $41.7B by 2021

According to a new report from IHS Markit, the global market for physical security equipment – including commercial and consumer video surveillance, access control, intruder alarms, entrance control (pedestrian and vehicle), mobile video and body-worn cameras, and enterprise storage – was worth an estimated $29.2 billion in 2016, a $1.6 billion (5.8 percent) increase  from  2015.

The market research firm predicts that the market for these products will grow at a compound annual growth rate (CAGR) of 7 percent over the next five years, reaching $41.7 billion in 2021.

China to Drive Market Growth

According to Oliver Philippou, senior analyst for video surveillance at IHS, high demand within the Chinese market will be the primary source of this growth. IHS estimates that China accounted for 29 percent of the global market in 2016, however; the country is expected to account for 38 percent of the global market by 2021, which is larger than the North American and Western European markets combined.

Philippou said the majority of this growth will be driven by investment in video surveillance equipment. In 2016, China was estimated to account for 42 percent of the global video surveillance market. But the Chinese government’s continued investment in safe cities projects is only expected to drive up demand for video surveillance products across the country in the years to come.

“Vertical analysis of the global physical security market highlights several regional differences. As a result of the significant investment by the Chinese government, the Asian government vertical was estimated to be slightly less than twice the size of the Americas government vertical in 2016 — and nearly three times the size of the EMEA (Europe, Middle East, Africa) government vertical. And it is estimated that the Asian market for banking and finance is roughly three times the size of the equivalent Americas and EMEA regions. However, as a proportion of their overall spend, the Americas and EMEA regions spend significantly more on privately funded business verticals such as the commercial, retail and sports and leisure markets,” wrote Philippou in a research note.

In addition, the Americas region, in which the U.S. accounts for 79 percent of all physical security equipment revenue, is the largest residential market in the world by far. The U.S., for example, leads the world when it comes to many aspects important to the residential market, such as video penetration and smart home adoption.

“Key trends driving this market include resolution quality improvements, advanced video content analytics and the growing adoption of cloud storage,” wrote Philippou. “A variety of new analytics continue to be developed and applied to video surveillance, the majority of which focus on refining what should and should not be recorded in order to save bandwidth and storage space. Motion detection, event recording, facial recognition and object awareness are just a few of the technologies being applied in this regard. Facial recognition potentially provides the owner of the surveillance system with a great deal of expanded functionality, as the cameras can be programmed to send specific alerts when a particular person is first spotted.”

Top Vendors

Philippou said that an analysis of the leading companies in the market showed that the top 10 equipment vendors in 2016 were the same as 2015 and that they are gaining market share over the rest of the industry.

According to the research firm, in 2015, the top 10 equipment manufacturers accounted for 35 percent market share and in 2016 this increased to 37.7 percent. However, Philippou pointed out that growth within the top 10 is being driven mainly by Chinese vendors Hikvision and Dahua, which are ranked first and second respectively.

“IHS Markit expects that if current technology trends continue, and the growth of the Chinese market persists, Hikvision and Dahua Technology will continue to gain market share in the future,” Philippou wrote.

For more information about the “Physical Security Equipment & Services Report – 2017” from IHS Markit, click here.