Avigilon buys ObjectVideo's patents, licensing program for $80.3m

Updated Jan. 15, 2015

VANCOUVER, British Columbia—The future of the video surveillance industry “is about business intelligence and video analytics,” according to Avigilon CEO Alexander Fernandes, and Avigilon's purchase of a division of ObjectVideo equips it for that future with what he calls the “strongest portfolio of intellectual property related to video analytics … the designers, technical knowhow, trade secrets and now the patents.”

In December, Avigilon paid $80.3 million for ObjectVideo's video analytic patent portfolio and licensing program.

Fernandes believes that the two—video analytics and video surveillance—cannot successfully be sold separately.

“I don't believe there's any market for video analytics alone,” Fernandes said. “It's not a separate market from video surveillance, it's the evolution of video surveillance.”

Fernandes says the early failures of video analytics were due to the fact that providers “tried to sell video analytics as an adjunct to an existing system.”
 
That, he said, is like trying to sell an air conditioner as an adjunct to a car. It's possible, he said, but you'd end up with a box bolted to the top of the car, with tubes and wires on the exterior.

Video analytics need to be a feature that end users opt into when they purchase a video surveillance system, not after the purchase, Fernandes said.

And to work properly, that video surveillance system needs to be “an end-to-end system,” Fernandes said. “You need to have some analytics in the camera … but not too much … and you need to have some in the back end.”

What about open systems? Avigilon offers open systems, Fernandes said, but for video analytics to work properly “it's not open or closed, it has to be a complete system, not a series of components.”

The purchase of this division of ObjectVideo, which is based in Reston, Va., comes with 124 U.S. and international patents and 202 U.S. and international patent applications.

The deal also brings recurring revenue in the form of licensing program where Avigilon competitors pay fees to license various analytics. Currently there are 19 licensees including Sony, Panasonic, Bosch, Hikvision, Pelco, FLIR and Tyco.

Via the royalty stream, Avigilon will in a sense “participate in the business” of its competitors,” Fernandes said.
 
This purchase works well with Avigilon's December 2013 purchase of VideoIQ for $32 million.

The VideoIQ deal came with some patents, but it also came with “the best product and development team,” he said. This team now has the OV patents and can “continue to develop video analytic products and features [which will enable Avigilon to] sell into the market unencumbered.”

Fernandes says it's still early days for video analytics.

After purchasing VideoIQ, Avigilon worked to “extract the source code and embed that intelligence in our cameras and our software,” Fernandes said. Step two will be to “propagate [these and other analytics] through our entire portfolio.” In its next phase, Avigilon will “get more into big data, developing business intelligence and analytic modules targeted to specific vertical markets.”  

While ObjectVideo sold this division, the company, based in Reston, Va., will continue to do business, OV CEO Raul Fernandez told Security Systems News. The company retains 28 employees, “the core scientists, engineers and products developers that invented our products and led to all the patents we developed,” Fernandez said. The company will continue with its R&D work with the U.S. government and other commercial clients.

GMP Securities L.P. advised Avigilon on the deal.