Published on Feb 03, 2015
Following the 2013 Tyco acquisition of Exacq and the 2014 Canon acquisition of Milestone, now Panasonic has acquired VideoInsight.
In this note, we provide feedback from VideoInsight's founder and Panasonic management, analyze the deal's potential for Panasonic and what this furthersignals for the future of the surveillance market.
VideoInsight Background
While the core of VideoInsight's offering is VMS software, the company also OEMs cameras, and has 2 additional brands, Advidia and BridgeVMS.
VideoInsight is based in Houston TX and is comparatively strongest in the South Central and South West of the US. They do not have a significant presence outside of North America.
Education is the majority of their overall business, according to the company.
VideoInsight reports ~125 employees. Revenue is not disclosed, but given they sell software and hardware, and their headcount, we estimate VideoInsight's revenue to be in the low tens of millions.
VideoInsight did say their CAGR since 2010 was 40%, which implies that revenue has nearly quadrupled in that time.
Why Sell?
VideoInsight says that their experience selling software and hardware (such as Advidia's OEMed cameras) was a 'great boost' to their business and that they saw great value in that combination / solution.
Though VideoInsight says they were 'approached pretty regularly to sell', what attracted them was Panasonic's 'high quality cameras that would continue to grow Advidia.' Morevoer, VideoInsight noted that Panasonic is strong in the educational market already, both in surveillance cameras and in other electronics such as projectors, audio systems, etc.
Panasonic Feedback
Panasonic expects VideoInsight to run autonomously / independently. Panasonic says the 'goal is not to make changes' and to find where they and VideoInsight can work together.
Panasonic felt the piece they were missing was video management software. For opportunities where they can take the lead or the VMS is changing, it 'gives them the ability to manage more of a solution.'
Moreover, Panasonic sees this as a way to differentiate against low cost commodity camera manufacturers.
In terms of verticals and geography, Panasonic's focus with VideoInsight is on education in North America. The next market for expanding VideoInsight VMS would be in-vehicle recording. In the future, they would look at expanding to other verticals.
At the same time, Panasonic reaffirmed support for third party VMSes and third party cameras on VideoInsight.
The Combination of Panasonic and VideoInsight
It appears that this will be a 'solution sale', combining Panasonic cameras and VideoInsight software, focused on the education market. We would expect to see bundling / discounts for buying both.
VideoInsight and Selling Direct
One of the most common concerns about VideoInsight is that they sell direct to education end users. VideoInsight says that they no longer do this, that they have not done it for years, acknowledging that they did do it a 'few times in the past' but have discontinued this practice. We note this because if this continued it would be a risk / issue for Panasonic.
What This Means for the VMS / Surveillance Market
As VideoInsight acknowledged themselves, selling cameras / hardware and software together was a winning combination. And Panasonic clearly see the need to do this to increase competitive positioning against low cost incumbents. This should not surprise industry insiders, given Avigilon's success selling end to end solutions, the Tyco / Exacq deal, the Canon / Milestone deal, Hikvision's rise and Axis' increasing struggles.
There are not many big independent VMS companies left. We expect more to be acquired.
