Sourcing Report: CCTV Digital Video Recorders

The worldwide DVR market has grown remarkably in recent years due to rising demand for high-tech and
reliable security solutions. Research firm Frost & Sullivan has placed 2006 global DVR production value at US$3.74 billion, predicting a compound annual growth rate (CAGR) of 42 percent for the DVR market until 2009.

Similarly, IDC expects global shipments of DVRs to reach more than 43 million units in 2010, projecting a 23 percent CAGR based on the estimated 20 million units exported in 2006.

In general, DVR production and export in mainland China and Taiwan are on the uptake as makers increase output to meet growing demand in the overseas markets.

Mainland China and Taiwan suppliers featured in this report had an aggregate output of 1.81 million units in 2006. Of the total, 518,460 units were shipped to the export markets. Surveyed makers' total output is forecast to increase by 40 percent in 2007, with exports posting a staggering 83 percent growth rate.

To date, standalone models still dominate the DVR market. Market watchers predict that about 60 percent of DVR makers' total output in 2008 will be standalone types. While ATM DVRs and mobile DVRs are also available in mainland China, most of them are developed based on existing standalone DVR platforms.

Some PC-based DVR makers have released digital video servers for remote surveillance via TCP/IP networks. Meanwhile, other suppliers are manufacturing digital video cards for domestic use. Due to customization issues, some mainland China suppliers have chosen to develop DVR capture cards instead of PC-based DVR systems.

Makers are adopting new compression technologies and introducing realtime recording functions to improve their respective product lines. Most DVRs made in mainland China support MPEG-4 and M-JPEG codecs. However, there is a slow but steady shift toward H.264. Some suppliers now offer H.264 DVRs while others are still exploring the new format.

Despite these milestones, compression technology remains the biggest concern of DVR makers in mainland China and Taiwan. To date, M-JPEG is still considered the most practical choice, given its better image quality, compatibility with most security systems and cost-efficiency. MPEG-4, on the other hand, is superior in terms of compression rate, compatibility with other systems and suitability for IP surveillance applications. Leading makers, however, are slowly shifting to the newest compression technology, H.264, given its higher compression rate and imaging quality.

MPEG-4 DVRs are considered mainstream, making up 60 percent of total DVR output in mainland China. DVRs supporting M-JPEG and MPEG-2 formats are still available for low-cost surveillance applications.

R&D capability determines tier grouping
DVR makers in mainland China are classified according to their R&D and software capabilities. There are three tiers of DVR makers in mainland China today.