The global video surveillance market grew by 4.3 per cent to $27 billion in 2025, according to a repor from research firm Omdia, as rising demand from artificial intelligence data centres and changing regulations reshape the security industry.

The report found that the sector is undergoing a major transformation, with new deployment strategies, changing storage requirements and evolving business models influencing how organisations approach video surveillance systems.

Regional market performance diverged significantly in 2025, with North America and Western Europe recording strong growth driven by AI-enabled system upgrades, faster replacement cycles and stricter compliance requirements.

These included the US National Defense Authorisation Act (NDAA) and the European Union’s AI Act, which have increased pressure on organisations to adopt more advanced and compliant security solutions.

Emerging markets also recorded strong expansion, supported by large-scale government infrastructure projects and rapid urban development.

China was a notable exception, with its video surveillance market contracting by 2 per cent in 2025.

Omdia attributed the decline to wider economic pressures, anti-involution policy measures and tighter public sector budgets, marking the fourth consecutive annual decline for the Chinese market.

The research firm expects global market growth to accelerate significantly in 2026, forecasting an expansion of 12.8 per cent, largely driven by rising component costs rather than increased sales volumes.

Omdia said the rapid growth of hyperscale AI data centres has created intense competition across industries for memory chips, storage equipment and semiconductor manufacturing capacity.

The resulting supply and demand imbalance has extended procurement timelines and contributed to significant price increases for key hardware components.

The report identified three major strategic shifts reshaping the global video surveillance market: software gaining a larger share of industry value, cybersecurity regulations becoming more influential and Chinese manufacturers changing their approach.

Software is increasingly capturing market value as customers move towards solutions focused on operational outcomes rather than simply purchasing equipment.

Omdia said the growth of AI-powered analytics, wider adoption of Video Surveillance as a Service (VSaaS) and stronger demand for business-focused solutions are accelerating software adoption.

This trend is particularly visible in government and industrial applications, as well as in more developed markets.

At the same time, cybersecurity and data sovereignty regulations are expanding beyond traditional product safety requirements, with governments introducing mandatory cybersecurity standards and data localisation rules.

Omdia highlighted India as an example of how regulatory changes can affect market performance, with the country’s video surveillance market shrinking by 9.4 per cent in 2025 following the introduction of Standardisation Testing and Quality Certification (STQC) requirements.

The report said additional measures, including Vietnam’s QCVN 11:2026 technical standards and the EU’s Cyber Resilience Act (CRA), will increase pressure on manufacturers to incorporate security-by-design principles throughout product development.

Companies that fail to meet these requirements risk being excluded from markets and being left with inventory that no longer complies with regulatory standards.

China’s surveillance industry is also undergoing a strategic shift following years of contraction, with manufacturers moving away from prioritising sales volumes and focusing instead on profitability.

Omdia said leading Chinese companies are withdrawing from lower-margin segments, directing investment towards differentiated AI capabilities and applying stricter project selection criteria focused on cash flow and managing outstanding payments.

“With component inflation expected to continue through 2027, organisations should reassess their storage infrastructure strategies, prioritise vendor-agnostic video management platforms and explore hybrid cloud architectures,” said Tommy Zhu, Senior Principal Analyst at Omdia.

“These measures help strengthen supply chain resilience and manage total cost of ownership in an increasingly constrained hardware environment,” Zhu added.