Body-camera firms celebrate Obama plan for police

President Barack Obama’s call this past week to spend $75 million to outfit America’s police departments with body cameras was celebrated as a move toward officer accountability after the killing of an unarmed teenager in Ferguson, Missouri. Suddenly the fledgling body-camera industry stands to make a fortune off police forces nationwide with newfound millions to spend.

The White House would help buy 50,000 body cameras through a proposed spending match with local law enforcement, nearly doubling the number of body cameras now in use across the country. And for the two companies in control of this market, the money represents a gold mine: $75 million is more than seven times what Taser International made from body-camera sales last year.

A spokesman for Taser, best known for its electroshock guns, called the Ferguson shooting a “massive awareness campaign” for police body cameras, and investors have feverishly jumped onboard. Taser’s stock has more than doubled, to $24 a share, since Officer Darren Wilson shot Michael Brown in August, climbing on Friday to its highest point in a decade.

Police body cameras, which boosters call one of the best ways to reduce false complaints and prevent abuses of power, were cast into the center of a major policy push after Brown’s killing; a grand jury declined to charge Wilson last month. Police agencies wanting the equipment have two options for where to direct their budgets: Vievu, a private Seattle firm that says it has sold more than 40,000 cameras, and Taser, which has sold about 30,000.

“We are feeling phenomenal right now,” Taser chief executive Patrick Smith said in an earnings call in October. “What everybody thought was crazy five years ago is now accepted as inevitable.”

And the cameras are just one money maker. Taser is also selling subscriptions to its online data cloud, where terabytes of police video footage can be uploaded, encrypted and stored. Vievu is working with Microsoft to develop its own cloud platform.

The services solve the police problem of how to manage its sensitive video. Taser’s service even comes with redaction features that can blur or mute on command. But they also give the camera companies a lucrative upsell that keeps agencies locked in and paying long-term. About 75 percent of the body cameras Taser sold this year have been packaged with contracts for Evidence.com, Taser’s cloud service, which sells for up to $55 per officer a month. Nearly all police departments that signed on, Taser said, opted for multi-year deals.

“The upfront cameras themselves are not that interesting. They are, or will be, fairly quickly commoditized. What investors will pay for is a recurring revenue stream,” said Steve Dyer, a senior research analyst with Craig- Hallum Capital Group. Taser “rightly saw early on that selling a plastic camera is going to be a lot worse of a business than building long-term relationships.”

The industry is still very much in its infancy: The 50,000 cameras supported under Obama’s proposal will cover only 7 percent of the nation’s more than 700,000 sworn officers. That has investors moving in quickly for a foothold in a rising industry, as well as federal money.

In two days after the White House’s announcement, the market value of Digital Ally, a small Kansas company that makes a video-recording police flashlight, exploded from $28 million to $55 million.

“I knew once the masses found out this technology existed, everyone would be clamoring for it,” Vievu chief executive Steve Ward said. “My dream of putting a camera on every cop is just coming true even quicker.”

Body cameras already have a strong track record: One year after officers in Rialto, California, began wearing cameras, complaints against officers and police use of force plunged. And though some analysts have been skeptical about how closely they’ll be adopted in smaller rural or suburban departments, others say their rise is unavoidable.

Jim Buerrmann, president of the Police Foundation in Washington, said, “Within the next five years or so, body-worn cameras will be as ubiquitous in the world of policing as handcuffs, the police radio, the gun.”

That’s great news for Taser, which has invested heavily to persuade America’s police forces to upgrade with the company’s tech. At an International Association of Chiefs of Police conference in October, Taser, whose theme was “Don’t Be a Dinosaur,” paid for two life-size velociraptors to walk the exhibit grounds and handed out large stuffed dinosaurs.

Taser’s Axon clip-on body camera looks like a pager and comes with a wide-angle digital lens. Though cameras like it sold in recent years for about $1,000, competition has driven its price down to $399; a sleeker eyeglass-mounted camera, the Axon Flex, sells for $599. Like many modern gadgets, the real money for the sellers will come from long-term contracts: Taser executives said most police departments are signing deals on Taser’s “Ultimate” plan, in which body cameras are replaced or upgraded every two to three years.

Taser says its body cameras have been deployed in all 50 states, implemented in 13 major cities and are in trial in 35 more. Officers in the St. Louis suburb where Brown was killed have started wearing the cameras. The New York Police Department became the largest in America to adopt the cameras with a pilot program in September, and further expansion could be hugely lucrative: Outfitting the whole department would cost about $32 million.

What does Taser have over, say, a wearable-camera giant like GoPro? Long business partnerships with police agencies, name recognition among officers and a steely style of marketing squarely aimed at the criminal-defense set. That competitive advantage, analysts said, could make it easier for body-camera makers to stay in public budgets for years to come.

Taser’s chief executive compared the rise of body cameras to the early days of its Taser guns: Though at first resisted by officers as too controversial, they are now nearly ubiquitous, found in all but 1,000 of the nation’s 18,000 police departments. Dashboard cameras in police cruisers saw similar resistance but are now standard issue. And White House backing gives the program that much more oomph: A similar White House fund-matching program led police departments to buy more than a million protective vests.

Taser’s business could extend far beyond the American badge. The company has invested in an international sales plan, with arms in Europe and Asia hawking its nonlethal weaponry, body cameras and access to the evidence cloud. Some of the largest agencies in Brazil are testing Axon cameras, deployed from an Amazon.com data center in São Paulo, according to Smith. (The global expansion comes with its own logistical issues: Some international clients, worried about privacy rights, insist that their footage be stored on servers outside the United States.)

Taser got into the video business by attaching cameras to its shock weaponry, but the technology had two flaws: It only recorded footage in the rare moments when aimed, and it did little to calm the situation now on tape. The firm later worked with the Oakley sunglass chain, an officer favorite, to develop something more passive and easy to use but has begun looking at its cloud offerings as the next step to get police departments hooked.

“Anybody can make a camera. That’s not the trick. The trick is: Can you make an ecosystem … to get police into that 21st-century mind-set?” said Steve Tuttle, a Taser spokesman. “It’s not a panacea. It’s not a magic bullet. … But we’re about as close as you can get right now.”