Parks Associates predicts about 27 percent of U.S. households to have security by 2021

Home security market to see 3.7 percent CAGR in number of broadband households with security
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Thursday, January 18, 2018

DALLAS—Parks Associates recently published a report, “Home Security: Market Sizing and Forecasts,” that outlines the firm’s expectations in the market between 2017 and 2021.

“Overall, Parks Associates estimates that adoption of security systems among all U.S. households will be roughly 27 percent, or 30 percent of broadband households, by 2021. This will leave 70 percent of broadband households untapped by the security industry,” Dina Abdelrazik, research analyst for Parks Associates, told Security Systems News in an email interview. This figure does not exclude self-monitored systems, Abdelrazik said, which could be in 1.8 million U.S. broadband homes by 2021.

“Our 2017 estimate for professionally monitored systems is 22% of broadband households, while roughly 2% of broadband households have a self-monitored security system,” said Abdelrazik.

The home security market will experience a 3.7 percent CAGR in the number of broadband households with a security system, Abdelrazik said. “The number of households with professionally monitored security systems continues to increase, but growth remains slow. The forecast for 2017 shows a less than one percent increase over 2016 and less than one percent increases year-over-year through 2021,” she said.

Abdelrazik said that Parks Associates uses three main sources of information for its forecast. “These are data gathered from our quarterly consumer surveys of 10,000 U.S. broadband households to understand consumer behavior, adoption, and trends; interviews with industry-leading executives; and third-party resources such as financial reports,” she said.

There are a variety of developments or trends that influence the home security market, according to Abdelrazik. “While the emergence of smart home products extends the value of a security system, it also increases competition, as smart devices are often sold independently of a traditional security system. Many are self-installable, meaning consumers are increasingly becoming accustomed to self-installing systems.”

She continued, “Additionally, adoption of interactive services continues to rise, advancements in technology offer new value potential for security systems, and efforts to expand the market with new business models are all major trends impacting the professional monitored market.”

Abdelrazik also highlighted analytic and voice control technologies as improving user experience. “Video analytics enable features that distinguish individuals in a visual frame, audio analytics can identify a variety of noises, and voice control simplifies the experience with vocal commands,” she said.

Two main reasons drive consumers to install a security system: their property and their family. “Among U.S. broadband households acquiring a security system in 2016, 29% reported that protecting the home and its belongings as the main purchase driver, followed by 26% for protecting family and loved ones,” said Abdelrazik.

Asked about potential hindrances to the market, Abdelrazik said some consumers don’t see a security system as a necessary expense. “Consumers can perceive security system ownership as a luxury due to the associated monthly fees that may come with acquiring a system. For professionally monitored security, cost is the most commonly cited reason for canceling services.”

The North American region will continue to have a high number of monitored household alarm systems through the forecast period, compared to other regions, according to Abdelrazik. “We forecast that for 2017, and the following four years, the North American market will have the greatest number of households with professionally monitored security, followed by the Asia and Pacific region. Asia-Pacific is the second largest market with over 15 million households with professionally monitored security in 2017. Other regions such as Western Europe, Eastern/Central Europe, Latin America, Africa, and Western/Central Asia remain in the single digits for professionally monitored households.”

The report also discuses key vendors in the market, specifically within the professionally monitored segment, such as Vivint, MONI, and ADT. “They are referenced in regards to analysis of RMR growth in the industry. For instance, professionally monitored providers garner higher RMR averages by including interactive services and smart home controls. Vivint is able to capture industry-leading RMR due to the high take rate of its smart home services,” said Abdelrazik.

Parks has noticed a growing trend of self-installed security systems, Abdelrazik noted. “Self-installed systems have slowly been taking a larger share of the overall security systems market. They remain, however, in the minority,” she said.