Hosted Video Can Deliver Most Value

VSaaS is growing in prominence as end users and installing security contractors alike increasingly realize the value proposition. As workable business models continue to be fine-tuned, recurring revenue is on the rise.

Ease of Use Is Key to Users

VSaaS creates the same intuitive, browser-or app-based experience similar to the aforementioned cloud-based consumer services. After all, many cloud surveillance services only have a few buttons. Go to live view of cameras, click recordings to playback recordings, and click download to save the video you want.

As dealer programs emerge and low-interest debt becomes available for RMR-based video contracts, the upfront fees are plummeting and the market for quality video surveillance is expanding dramatically. The result is a highly profitable RMR stream for contract owners.

Because these services are so easy to use many subscribers log-in more than five times per day, almost entirely for nonsecurity-related purposes. They may be logging in to see if the restaurant is busy, if it’s clean, etc. A franchise cellphone storeowner recently described the demonstrable difference in sales when the employees proactively engaged customers who walked in the door.

“When the employees sit behind the counter waiting for customers to approach the register, every few customers walk in, look around and leave,” the storeowner said recently. “When customers are greeted and engaged, they almost always buy something.”

This storeowner can’t possibly be in all of his locations all of the time. By using a video app on his smartphone, he can pop into each store a few times a day and audit this process.

“Many times I’m logging in, I’m looking at the store not because I suspect something wrong is happening, but rather because it makes me comfortable to see that the right things are happening,” he says.

This particular customer previously had functional DVRs, and could have logged in to each of them and reviewed the same exact thing, but he didn’t, just as our music-loving homeowner never used iTunes to download or play music. In both instances, the ease-of-use changed the frequency of use and added an immense amount of value.

The same fundamentals have been successfully used to bundle home automation services with traditional alarm systems. The reality is that residential alarm systems aren’t used very often, so it can be difficult to explain the full value proposition to a user about why one service or panel is better than another. Home automation has daily use functionality, for which customers value and have demonstrated a willingness to pay. One of the largest home automation companies currently makes this point front and center on its Web site: “Finally, a security system you’ll actually use.”

Just as high-margin RMR contracts encouraged the subsidy of equipment/installation prices in the alarm industry, the same model is beginning to occur in video surveillance. As dealer programs emerge and low-interest debt becomes available for RMR-based video contracts, the upfront fees are plummeting and the market for quality video surveillance is expanding dramatically. The result is a highly profitable RMR stream for contract owners.

Consider the two components of value: What the customer puts in ($) and what they get out (usefulness). Now let’s return to the original question of why a customer would want to pay a monthly fee for video surveillance. If the usefulness of the VSaaS solution is the same as a DVR, then it is a poor proposition. The service component of VSaaS adds usefulness/value in the form of reliability, continuity, customer service and ease of use. When combined with subsidized equipment and installation fees, this creates a strong value proposition for users and a profitable business opportunity for providers.

Brian Lohse is Co-founder and Vice President of Des Plaines, Ill.-based Secure-i (secure-i.com), a cloud-based video surveillance service. He can be contacted at [email protected].

 

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