Report suggests increased monitoring fees, new services could 'buffer' flat revenues

Thursday, February 19, 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 4-8 percent 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," Parks Associates CEO Tricia Parks. "There have been fits and starts at this before, and it turns out its not so easy. And also other market opportunities were bigger and more important and more critical to the telcos and the cablecos, and they really receded." Parks said, however, that with broadband slowing down and cable approaching saturation, telcos and cable providers are beginning to look elsewhere once again. "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 suggested end users will tolerate a slight increase in monthly monitoring fees, especially if monitoring 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 just saying, 'go raise your fees,' but just saying, 'find out what you can do.' Or offer another kind of benefit to accompany what they already have and one can probably get another fee for that."