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Russia represents a unique market in the world. A private and open market in some ways and very state dominated in others. The world’s biggest country by land area and one of the least densely populated with just eight people per km². Russia is both an aging superpower and an emerging market. A business landscape full of opportunity and a venture fraught with risk.

Russia’s security sector is vast. Market growth is largely driven by state initiatives and was given significant boosts when Russia hosted the 2014 Winter Olympics and then the 2018 World Cup. The international football/soccer tournament attracted more than 5 million tourists, including 2.9 million foreigners.

Video surveillance was a primary security feature for these major events. The Luzhniki Stadium, Russia’s national sports ground, alone had 4,000 cameras and more than 900 various scanners, monitors and detectors installed for last year’s event. Facial recognition software was also successfully trialed at the 2018 FIFA World Cup to track the movements of people and identify security threats before they develop. These systems have now been introduced at airports, train stations and other transport hubs around the country.

Research from Russia’s Moscow City Telephone Network (MGTS) has demonstrated double-digit growth in the Russian video surveillance sector. In 2016, the market grew 20% year-on-year, in terms of value. The following year, Russia’s CCTV sector was worth around $1.26 billion, according to the study.

While government investment in the segment has reduced slightly since these major sporting events, the private sector has taken up the slack. 65% of purchases for video monitoring and surveillance systems came from corporations and businesses, versus 28% for central and local governments, according to MGTS.

“The video surveillance market in Russia is driven by the government and commercial sectors,” Alexander Denezhko, CEO of Grundig Security Russia. “The government will require execution of physical security laws; this shapes the market and helps satisfying the needs of customers who are impacted by the legislation. Businesses a lot more often start using video surveillance systems to manage or automate their operations aiming at: monetizing their video surveillance installations; optimizing the architecture of video surveillance installations; and automizing operations.”

Denezhko was commenting on this technological evolution of video surveillance technology in Russia in the build-up to the 12th annual All-over-IP Expo, a leading technology event to be held in Moscow, in late November. Demonstrating their faith in the Russian security market, (Grundig was announced as the main sponsor of All-over-IP 2019 earlier this month), which will no doubt be buoyed by the strong trend towards advances in artificial intelligence forecast in the Russian market by the All-over-IP’s own research.

“AI video analytics is still a very new market. Video surveillance vendors and solution providers are getting access to a wider variety of new business opportunities. System integrators and security installers are able to offer a more extensive portfolio of solutions which will expand their business, improve sales and profitability. An unwillingness to embrace AI in the next few years puts any company operating on the video surveillance market at risk of failure,” states All-over-IP 2019.

The firms network of experts predicts that video surveillance, security, and machine vision technology will evolve by “improving intelligence and automation” in line with the growing support for a digital economy in Russia. However, the sheer number of potential installations is also developing rapidly, suggesting strong growth will continue in the coming years.

Major construction projects like the New Moscow capital expansion will create thousands of new residential, commercial and public buildings to the Russian capital, driving the demand for CCTV and other security systems. New Moscow is part of an nationwide “Safe Region” program, a government initiative aimed at boosting safety and well-being in Russia’s urban spaces. It has been suggested that most residential buildings in Moscow and its surrounding province will be outfitted with facial recognition software and “CCTV banks.”

Away from the capital, thousands of cities, towns, and villages will receive protective services and systems through the Safe Region initiative. Across the vast country, municipalities will see varying levels of investment in their CCTV, fire safety, and IT infrastructure. Reports suggest that Mordovia, in European Russia, will receive $6.3bn in security funding, whereas Chelyabinsk, near the border with Kazakhstan, will have to make do with $1.9bn, for example.

Fire has also become a major issue in Russia after some high-profile recent incidents, further driving the security market through combined fire protection and security installations. Just last year, in March 2018, 64 people tragically lost their lives in a fire at a Siberian shopping center, highlighting the poor levels of fire safety in a large percentage of Russia public and private building stock.

A fire safety bill introduced to the Russian parliament in 2018 promises to trigger a new wave of activity in the coming years. While the perceived risk and a poor reputation for ease-of-doing-business will continue to act as barriers for entry of international firms, the potential of the Russian security market is fast becoming too big to ignore.