At ASG Security, hosted video is hot

BELTSVILLE, Md.—ASG Security is touting its hosted video offering as its “pathway out of analog.” In fact, its new ASG Video offering is taking off at such a rate that executives believe one year from now, the company's sales force will sell only IP cameras—no analog at all—to its small-business customers.

“By the end of the year, analog will be over. � That's the goal,” Bob Ryan, ASG SVP of sales and marketing, told Security Systems News.

ASG launched its offering last June. “In six months, we sold 1,000 channels of video with an average RMR of $20 per channel,” Ryan said. “And that's just putting our toe in the water. We beat everyone else out and were named Axis' AVHS partner of the year.”

Axis' AVHS system launched at ISC West in 2011. ASG branded its offering "ASG Video." The package includes Axis IP cameras (or encoders), cloud storage provided by Secure-I, and local onsite storage (NAS) provided by Iomega.

Hosted video has been talked about for a while now, but most agree that it hasn't taken off as quickly as some predicted a couple years ago.

ASG customers “demonstrated an appetite for consuming video as a service and were looking to outsource this service to the cloud like they have with so many other business operations like email, payroll and CRM,” said Matt Krebs, business development manager for Axis Communications.

Ryan said there are a few keys to ASG's successful approach. First, to get his sales force to understand the offering, he explains that the pieces of the offering are much like a wireless intrusion system: hardware, software/cloud provider, and the installer or integrator. And second, ASG is using a sales model that security installers understand.

The same way alarm companies subsidize the installation of home alarm systems, ASG is subsidizing the installation of hosted video. This means� there's “a lower cost of entry. We take away the dollar barrier and capture that in the RMR.”

The sale then “looks and feels like the intrusion model,” Ryan explained.

He acknowledged that not every security company can afford to subsidize hosted video.

Brian Lohse, VP, Secure-i, said ASG is one of its first customers to recognize�how significant an opportunity hosted video is for customers and ASG alike. "They organized the company resources necessary to deliver�a high-quality service at an affordable price point and then they aggressively marketed it to their sales force and their customers," Lohse said.

Ryan defined the market for ASG Video is any small business with eight or fewer cameras. It's a big market, he said. “Seventy percent of all installed video [jobs] are 10 cameras or less and that section of the market is the one all the big [video] manufacturers have been ignoring forever.”

“The fastest-growing segment of security is video, but the installation of video was of limited value [from a recurring profit standpoint] to a security company until hosted video,” he said. Previously, video installations represented one-time revenue, but not anymore.

Previously, ASG would sell a small business four cameras and a DVR. That would be a one-time sale. It would also sell an intrusion system and charge a $35-per-month monitoring fee. Now, that same customer will still pay $35 monthly for monitoring, but it gets rid of its DVR and pays $20 per month, per camera, for hosted video.

Getting rid of the DVR eliminates headaches for the customer and ASG, Ryan said.

Customers can opt to pay for the video system upfront, in which case ASG will charge less for hosting, roughly $10 to $12 per camera per month. However, Ryan said that so far, “the take rate is higher on the ASG-owned or leased system.”

The sales force has to understand that the main purpose of ASG Video is not security, “it's a business intelligence system,” he said. Customers use it to “get critical information about what's happening in their business when they're not there.”

Ryan believes video is the most compelling security service because it's visual. “People get addicted to it very easily. If you take it away, they freak out.”

ASG Video customers really like keeping an eye on their business from afar, he said. Ryan joked that they quickly become “video junkies. They can live without alarm monitoring, but with video they've got to have it.”

Ryan said ASG's hosted video offering is now “ready for a reboot.”

“We're going to take what we learned, repackage it and put it out to the field, hit all the major offices,” he said.

Within the next several months ASG will have a hosted video specialist in each of its 11 regions. Each specialist will be professionally certified by Axis Communications. The idea is to “have a technical leader in every market � someone who knows the service inside and out, who can show other [sales reps] how easy it is and bring down the fear factor.”

He noted that ASG Video is not comparable to some video offerings designed for homes or small businesses, what he calls “soccer-mom video.”

Soccer-mom video is for “a homeowner to get a live video clip of Johnny coming home.” ASG Video, on the other hand, “provides continuous recording in the cloud, provides � an HD local storage device (NAS) manufactured by Iomega.” The NAS enables customers to “put 2 terabytes of storage in for a couple hundred bucks � if they need forensic-level HD video in month or two, you have it.”

ASG has several customer sites that ASG salespeople can access to show potential customers how ASG Video works. Ryan advises his salespeople to go light on the sales talk and just pull the video up on their iPad. He said they should just show the video to the potential customer and say: “Check this out.” The customer's response is generally: “How can I get this?” Ryan said.

“This is a game changer. [Axis and Secure-i] have taken the hottest, fastest-growing part of the business and converted it from a product sale to an [RMR-generating] service,” Ryan said.

“This is very, very significant,” he said.