Looking for a way to inject new life and profits into your central station, security dealership or systems integration business? Then remote video monitoring may very well be the ticket.

Think you’ve heard it all before? Don’t be so sure. Comparing the impressive capabilities and real-world functionality of today’s video monitoring to that of just a few years ago is like stacking a crystal radio up against an iPod®.

The confluence of recent breakthroughs in video, computer and integration technology, along with more reasonable equipment costs, advanced installation techniques, and increasing end-user awareness and interest are conspiring to bring this market to the brink of a boom.

These developments have positioned remote video as a potential remedy for those tired of being squeezed by ever-narrowing installation and monitoring margins.

“The margins are much better than anything else we have in the industry for our end of the business [third-party central station monitoring] — and for the dealer’s end of the business as well,” says David Brown, director, national accounts for Arlington, Ill.-headquartered Security Associates Int’l Inc. (SAI). “The margins are terrific, especially with existing clientele.”

SAI is one of many capitalizing on the virtues of remote video monitoring by offering services such as alarm verification, open and close service, virtual guard tours and a range of derivatives. The technology has become so robust that the applications are seemingly limitless.

“There are many opportunities for remote monitoring,” says Ralph Sevinor, president of Wayne Alarm Systems Inc. in Lynn, Mass. “It is going to keep getting better and more accurate and become the standard for the security industry.”

As fantastic and enticing as this all sounds, foraying into remote video monitoring is not without its caveats.

On the monitoring side, the cost of entry remains substantial; central stations and security dealers/integrators alike are experimenting with marketing schemes, service offerings and pricing; and no one is yet making huge money. To help you navigate these unchartered waters, several leading providers that have taken the plunge offer insight on what to expect in the deep end of the remote video pool.

Technology, Installation Techniques Heve Been Transformed
There have been several technological developments during the past five to 10 years that have transformed remote video from a techno-geek novelty into a bona fide security and management solution.

Among the most significant advances: Images have become sharper, digitized and more densely compressed; microprocessor speeds and memory storage have soared; and the Internet, broadband and networking have opened up new channels of transmission. Predating and concurrent with these events, security dealers and systems integrators have learned the finer points of CCTV system installation. Mostly through trial and error, they have come up with ways to maximize video technology by making a science out of camera selection, camera positioning, lighting and other system design variables.

Expert design and installation skills are especially important for video monitoring applications, where operators need the most accurate visual information possible.

“The challenges we face is video installations have to be designed differently for alarm verification than they were before,” says Morgan Hertel, vice president of operations for the Command Center Inc. in Corona, Calif. “Cameras now have to work with no lights on in the buildings. They have to watch entrances and perimeter glass more than they did before. Also, alarm systems must effectively interface with video systems more.”

Computerization has forever altered and improved electronic security equipment, as products have become based on software, rather than hardware. This has enormously expanded system adaptability and capability.

Software Developers Ease Pain of Central Station Integration
In particular, the viability of the remote video market has dramatically hastened during the past one or two years as clunky central station monitoring software has been redefined. Suppliers have begun designing multiplatform solutions aimed at seamlessly integrating a multitude of video capabilities with a variety of other central station functionality.

Thus, remote video services can now be tied into other monitored systems, such as burglar alarms or access control.

“Everyone started talking seriously about remote video nearly two years ago,” says Woodie Andrawos, executive vice president for National Monitoring Center (NMC) in Aliso Viejo, Calif. “The problem was the old way used standalone packages, which meant you were dealing with one application at a time.”

According to Andrawos, that all changed when NMC’s vendor adapted its software suite to handle a slew of manufacturers’ DVRs and created a universal graphical user interface (GUI) to facilitate intuitively controlled video monitoring at every operator station. There is also enough flexibility built in so if a dealer approaches NMC about handling a make of DVR not yet integrated into its facility, the vendor can help the central station accommodate the request within a matter of days.

Although manufacturers and central stations are clearly moving in the right direction, the compatibility issue is still far from a panacea. The process of solving these conflicts may be the final vestige of technological immaturity remote video must overcome on the path to achieving critical mass.

Selling Dealers, End Users Means Overcoming Premature Hype
Support is just one of many key concerns continuing to make most installing companies leery of selling remote video services to their customers.

Many have been snake-bitten in the past by “the latest and greatest.” Furthermore, most have heard about remote video for so long they may have tuned it out — dismissing it as hype based on early perceptions of questionable quality and reliability, high cost and limited interest.

Even though the legitimacy of remote video has progressed far beyond its initial introduction, for dealers seeing is not necessarily believing. Monitoring providers face a serious challenge in opening dealers’ eyes wider to enable them to see the market’s bigger, brighter picture.

“Dealers are afraid to take the challenge, they are afraid of the unknown,” says Michael Schubert, president of NMC. “A lot of them do not understand it yet. It’s about getting away from the usual and taking advantage of the technology and new revenue streams.”

Not only do monitoring providers like NMC have to win over installing companies, they also have to teach those operations how to sell their own customers on remote video.

Target Your Marketing Via Direct Mail, Trade Print Ads, Demos
As with most new service offerings, the most cost-effective means of acquiring business is by marketing to existing customers — a tactic all too often neglected in the mad rush to cultivate new business. Direct mail and telemarketing are excellent ways to accomplish this.

For new business, it is highly advisable to concentrate on precisely targeted marketing as opposed to the shotgun approach of scattering ads about willy-nilly. Placing print ads in trade publications and direct demonstrations are two outstanding options.

“We frequently allow people a look into our central station through our remote video system,” says Jeffrey Atkins, president of Syracuse, N.Y.–based Rapid Response Monitoring Services Inc. “People are amazed at the clarity of image and real-time viewing, as well as playback review capabilities. The fact that it can play back images through their own PC makes
it very attractive.”

Manufacturers are also on the ready to assist dealers and central stations in getting set up for video monitoring and in selling the services. After all, they realize a significant commitment of time, energy and money is being expended and that success is in their best interests as well. Their assistance can help offset the high cost of market entry.

“It is pretty pricey. Flat panels and some of the other equipment is not cheap,” attests Schubert. “You are also going to pay for integration, which is very expensive. You have to be committed to do it. To get the word out, we just did a mailer, we are talking about it in the trade pubs, we are calling clients and we participate in trade association meetings. Plus, all the manufacturers we are working with are pushing for business as well.”

Projected Monitoring Margins Are Promising But Unproven

Costs and fees remain big unknowns in remote video. Although equipment has come down in price, providers are uncertain about how much money they should spend and how deeply they should commit to a market still searching to find its footing.

“We have significant past and ongoing marketing costs for our video services in order to make installing dealers aware of what we have available in the way of monitoring,” states Kevin McCarthy, national sales manager for Chicago-headquartered EMERgency 24. “We have also experienced additional administrative costs in order to develop the necessary dealer and subscriber contracts.”

Monitoring firms are grappling with how much to charge for services in the absence of any proven models to follow. Market projections, return-on-investment (ROI) expectations, timetable estimates and other standard business metrics fall

into the realm of almost pure speculation.

“Dealers are still a little unsure how to approach the end user for the monitoring, but that is quickly changing,” says Barry Brannon, president of Marlin Central Monitoring in Kissimmee, Fla. “We are working to train them how to sell the recurring monthly revenue. Dealers already know how to mark up CCTV equipment and charge for installations; now the objective is to incorporate RMR from monitoring into each bid proposal. Doing so will make this a viable market for the long haul, both for the dealer and monitoring facility.”

Whether it’s a central station selling through dealers or a dealer selling directly to end users, no one yet knows the profits this market might bring. However, the smart money is riding on it eventually generating healthy returns – maybe even the best this industry has ever seen.

“The return on investment for video systems is oftentimes much sooner than with alarm monitoring,” asserts Tom Few Jr. of Irvine, Calif.‘s National Alarm Computer Center (NACC). “RMR for video systems can range from $100 a month to $2,000 a month. In the traditional alarm revenue stream, it would require more than 25 accounts to yield the same revenue as one interactive video account. The ROI for the actual installation may still take some time, but the increased RMR helps offset that cost.”

Flat Rate, Per-Incident, Combos Among Fee Schemes Being Tried

As it stands, remote video fee structures are all over the map – both in terms of actual dollar amounts and the methods in which dealers and end users are billed. Some providers are charging a flat, monthly rate, while some are assessing charges per incident. Still, others are using a combination of the two featuring either set or escalating per-incident fees.

“Being so new, we got together with some dealers and to the best of our abilities, considering our costs and what the market might bear, put together a preliminary fee structure,” explains NMC’s Andrawos. “We are going with both a monthly fee of $18, which covers up to three incidents, and an additional charge of $3 per incident thereafter.”

The nature of the particular remote video service must be taken into account when developing pricing as well. For example, alarm verification will typically require less operator time, and consequently less in labor costs, than guard tour services.

Then there’s the matter of training – not only for monitoring operators, but for installers and end users as well – and the added resources needed to accomplish it.

“Our operators are highly trained,” says NACC’s Few. “They must complete a year of standard alarm monitoring training, become SIA [Security Industry Association] and CSAA [Central Station Alarm Association] certified, and pass a BPAD behavioral assessment test.”

Those companies that keep in closest contact with their customers and truly understand their needs figure to be better positioned to make the most accurate educated guesses about how to help make remote video a financial boon for everyone.

“If you want to be successful at remote video, you have to invest some time to learn what it is and how it sells,” recommends SAI’s Brown. “That’s why we just created a focus group to help us write a manual for sales and installation that will be focused on issues like how to overcome objections and what you might run into out in the field.”

When a service offering is in its infancy, the strongest asset a provider can have might very well be flexibility. It’s crucial to be able to adjust expenditures, staffing and customer billing on the fly.

“We have different rates for different services – there is a flat rate and an ongoing support charge,” says Wayne Alarm’s Sevinor. “Charges are based on monitoring minutes, whether they be for electronic verification or guard tours.”

Providers Continue to Ramp Up in Anticipation of Market Explosion

Regardless of the lingering challenges and question marks, monitoring providers are clearly much more optimistic about the long-term prospects of remote video than they once were.

“The flexibility of the technology is a huge factor in making remote video not only accessible but affordable to users on all levels for protecting lives and property,” asserts Rapid Response’s Atkins. “It is a very exciting time for this market as those elements are coming together. The opportunities are endless.”

The newfound commitment to remote video is evidenced by the fact that so many more monitoring businesses have recently upgraded their facilities to accommodate the technology. In addition, earlier entrants into the market have expanded what had been just one or two video-ready operator stations into facility-wide functionality.

To date though, no one has more than a handful of customers and conjecture runs rampant on what application will be the one that triggers remote video ubiquity. Most seem to believe it is going to be alarm verification, while others tout two-way interactive, guard tour or a host of other possibilities.

All agree that breakthrough success will be realized in the commercial and industrial sectors prior to residential. After all, that is where the lion’s share of the initial business is being generated.

“I see the primary driver for this market being false alarm legislation,” contends SAI’s Brown. “I believe that is going to be something even more focused in 2005, simply because there are so many areas of the country that are enacting their own forms of legislation. If we can show them video verification reduces false alarms and also helps them when they respond to real events, it will be a win-win for everyone.”

Still, the “killer app” may wind up being something no one has even thought of yet. Once the industry discovers it, those with the foresight to have explored the market early on will likely be most richly rewarded. As lucrative as remote video may turn out to be,
there’s always the danger it may one day become commoditized. Getting into it sooner rather than later simply makes good business sense.

“This [remote video] will be the direction of our industry for many years to come,” predicts Marlin Central’s Brannon. “The real boom in the market will be seen in 2006, but the dealers that are now being involved will have the local reputation

of being industry leaders in video monitoring and will get the bulk of the future business that will be generated.”

Wayne Alarm’s Sevinor hammers this point home even further, and draws a reasonable conclusion about why some may miss the boat.

“I don’t believe many security companies will survive if they don’t start offering this service,” he contends. “Some people believe the security industry is slow to react to changing technology. I see it as being more a cautious approach to assure customers’ security.”

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