Higher fees, new services may 'buffer' flat revenues

Wednesday, April 1, 2009

DALLAS--A January report from Parks Associates, an international market research and consulting company specializing in emerging consumer technology products and services, finds security system monitoring revenue is likely to be very stable despite current economic conditions, and customers may even tolerate a rate increase.

The report, “Home Systems: Home Security Update,” finds the number of monitored security households intending to cancel their service is only four to eipercent higher than normal due to the economic downturn, but still quite stable. This is good news for the industry, but Parks also warns that the resilience of this service category will attract new competitors among telcos, cable companies, and others.

“Anybody who is already getting into the house has the potential to do security as one more thing when they get there,” said Parks Associates CEO Tricia Parks.  Parks said with broadband slowing down and cable approaching saturation, telcos and cable providers are beginning to look elsewhere. “They’re looking around, if not for this year, then for years ahead, saying ‘Where’s the next incremental revenue come from?’ And in that context they’re all looking at security.”

Parks said end users will tolerate a slight increase in monthly monitoring fees, especially if companies begin adding value to their solutions, citing in particular the recent partnership between ADT and iControl. “A slight rise in monthly fees, such as from $25 to $26.95, will not cause current subscribers to abandon their services,” Parks said. “We’re not saying, ‘just go raise your fees,’ but, ‘find out what you can do.’ Or offer another kind of benefit to accompany what they already have.”