Recession has ‘marginal’ effect on CCTV growth

14 Jul 09

The latest MBD Market Development Report says the value of the CCTV systems market is “anticipated to decline” in 2009 but only at a “marginal” level and return to growth in 2010 at a rate of 2-4 per cent up until 2013.

Growth will be spurred by hybrid IP-analogue systems, mobile CCTV and remote monitoring and demand from the London 2012 Olympics.

In 2008, the value of the CCTV market increased by an estimated 2 per cent to £1175 million, says the report, following slightly stronger nominal growth of between 3- 5 per cent recorded in the previous three years.

Overall, the value of the market is believed to have increased by a cumulative 15 per cent in nominal terms between 2004 and 2008.

Says the report from analysts, Market & Business Development:

“The more moderate increase in the latter year is a reflection of the deteriorating economic conditions, tighter credit availability and a slowdown in construction output in the private commercial sector, which negatively affected CCTV sales during the second half of the year.

“During the review period, growth in the market has been driven by the switch from analogue to digital CCTV and networked video solutions.

“The CCTV market has also benefited from increased construction output during much of the review period, in particular in the office, health and education sectors. Other sectors that have also shown strong growth potential include mobile CCTV systems, automatic number plate recognition systems and algorithmic systems.”

Forecast 2009-20013

In its forecast, MBD says the value of the UK CCTV systems market (including sales and rental income) is anticipated to decline this year, but only at a “marginal” level.

“This is mainly a result of the continued economic downturn and reduced construction output, particularly in the commercial sector, exerting a negative impact on sales.”

The UK CCTV market is expected to return to growth in 2010, with annual growth expected to fluctuate between 2-4 per cent in the period 2010 to 2013.

By 2013, the value of the sector is anticipated to reach £1302 million at 2008 prices, representing overall growth of 11 per cent in real terms compared with 2008.

Says the report: “The CCTV market is expected to benefit from increased demand for public security generated by the London 2012 Olympics.

“The need to tighten security in public areas is also likely to boost demand from the Government and transport sectors.

“Demand for digital and networked systems is expected to continue to increase, although in the short-term sales growth is expected to slow due to the recession.

“Hybrid systems, which allow digital IP enabled technology to be added to existing analogue systems, thus providing a more cost-effective option, are anticipated to show the strongest growth potential over the next five years.

“Further sectors of the CCTV market which are expected to show strong growth potential include remote monitoring services, mobile video surveillance, rapid deployment cameras and alarm activated systems. However, intense price competition and increased import penetration from low cost manufacturers at the lower end of the market are expected to continue to be features of the CCTV market.”

2009 installations value declines by 1 per cent

The value of CCTV installations is anticipated to increase during much of the forecast period, except for a projected 1 per cent decline in 2009. Overall, the value of the sector is anticipated to increase by 8 per cent in real terms between 2008 and 2013.

However, says the report, “the proportional importance of the sector to the total market is forecast to decline moderately from 46 percent in 2008 to an anticipated 45 per cent in 2013. This reflects the increasing popularity of digital and networked systems, which tend to have lower installation costs.”

Equipment sales increase by 15 per cent

Sales of CCTV equipment are also expected to decline by 1 per cent in 2009, followed by year-on-year growth from 2010 onwards.

Annual growth levels are expected to fluctuate between 3 and 5 per cent in real terms. Overall, sales are forecast to increase by 15 per cent in real terms between 2008 and 2013.

“Despite value growth, the sector is anticipated to remain somewhat constrained by falling prices and intense price competition,” says the report.

Importance of maintenance

The importance of CCTV maintenance contracts is expected to be maintained at around 19 per cent during the forecast period, says the report.

In value terms, maintenance contracts are anticipated to increase in each year up to 2013, cumulating in growth of 13 per cent in real terms.

“Nonetheless, stronger growth is expected to be hindered by the rising popularity of IP enabled CCTV systems, which tend to have lower maintenance costs,” it adds.

* The UK CCTV Market Development Report is available from MBD, price: £600

Ordering details: www.mbdltd.co.uk

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