Despite their best efforts, multi-system operators (MSOs) like Comcast are finding it difficult to gain customers for their residential security offerings.
Despite their best efforts, multi-system operators (MSOs) like Comcast are finding it difficult to gain customers for their residential security offerings.
According to a report by IHS, only 0.4 percent of fixed broadband subscribers in the U.S. purchased alarm system from an MSO in 2015. The research firm forecasts this figure to not exceed 1 percent before 2020. Just over 343,000 residential alarm panels were sold to MSOs in Americas region in 2015, while those to professional security sector exceeded 2 million.
The entry of cable and telecommunication companies into the residential market had seen mixed reactions from traditional alarm companies. On the one hand these large companies appeared to be a threat to dealers considering their large customer bases and advertising budgets. On the other, some were also hopeful that their entry would increase awareness about residential security.
Despite the weak sales, MSOs continue to make large-scale investments in the sector. Comcast recently announced its plan to buy “Converge” software platform from Icontrol Networks.
“Huge budgets afforded to the new MSO divisions also come with strings attached by their parent companies,” said Jim Dearing, a residential security analyst for IHS in an interview with SIW. “If they don’t acquire a certain number of subscribers or acceptable levels of profitability by a certain date, companies might close down the home security division, in order to free up budget to pursue other revenue-generating opportunities.”
Better prospects for DIY and professional security
The report further said that shipments of DIY security systems in the American intruder alarm equipment market are expected to expand at a CAGR of 23 percent from 2015 to 2020.
CAGR of systems being shipped to professional security companies is expected to be lower at less than 5 percent during the same period, but according to Dearing, these companies will seek out new opportunities of business that can potentially increase recurring monthly revenue as well as adoption of intrusion detection systems.
“Marketing building automation technology to the SMB end user segment and affordable video in the home are good examples of this that are already being scoped out by the professional security industry,” Dearing added.
Meanwhile, DIY systems, despite their growth over the years, still have challenges to overcome before they can become a threat to professional security providers.
“Interoperability issues arise from so many players attempting to enter the space in a short amount of time and there are still challenges in keeping installation simple without sacrificing functionality that need to be addressed,” Dearing said. “Overall, especially with the growing presence of ‘a la carte’ monitoring, connected DIY solutions pose much more of a threat to the MSOs rather than the professional security industry.”