EL SEGUNDO, Calif. — With its purchase of LifeShield Home Security, a do-it-yourself (DIY) security company, satellite TV provider DirectTV officially entered the home security space, the company announced Tuesday. Terms of the deal were not released.
With this deal, DirectTV joins a number of cable operators and telecommunications companies, such as Time Warner, AT&T and Verizon, which have decided to offer home security services. One reason the pay-TV distributor decided to join the space is to look for new revenue streams for the company, according to Robert Mercer, a spokesman for DirectTV.
“In general, the video home security business is a good strategic fit for us,” he tells SSI. “It’s profitable and has low market penetration. We didn’t want to rush into the home security business just to compete with cable companies and others offering home security unless the right opportunity came along. Ultimately, it did with LifeShield.”
DirectTV will begin marketing LifeShield products and services under the LifeShield brand in the first quarter of 2014. Protection 1, which provides monitoring for current LifeShield customers, will continue offering its services.
With 22,000 subscribers, Langhorne, Pa.-based LifeShield brings in roughly $15 million in annual revenue. LifeShield CEO Mike Hagan will continue to operate the security business, and will continue to manage his 105-member team at its headquarters.
Although DirecTV looked at several home security firms, LifeShield proved appealing for its “innovative, yet easy to use and install [products], and we would be able to seamlessly integrate the service with our video experience,” Mercer says. “We already make millions of in-home visits to our customers every year, and with this deal, we’ll be able to add home security installations along with other services we provide.”
This transaction is different from the other deals where cable/telco companies that have entered into the security space, according to Jeff Kessler, managing director at Imperial Capital.
“In our view, this is a good example of a telco/cable company looking at security as more than another incremental home services add-on where pricing is completely fungible,” Kessler stated in a research briefing.
However, Kessler notes that although DirecTV can market its services on the Web and other forms of mediums as much as it wants, unless the satellite TV provider offers reliable services to customers, the firm won’t be very successful.
Mercer recognizes that point, and says that DirecTV’s advantage will be offering LifeShield’s “innovative wireless product,” which features an expandable tablet-based system, as well as video monitoring on core packages, will set the company a part.
“The home security market is barely 20% penetrated, with home automation at a mere 1%,” Mercer says. “So there is a lot of room for growth. With the ability to leverage our brand and national footprint, coupled with an expert marketing organization and sales force, we believe we can make significant inroads in the market over time.”
Kessler says alarm companies concerned about DirecTV’s entrance into the home security space, shouldn’t worry too much. He believes that telcos/cable providers don’t fully understand how long it will take to successfully provide intrusion, fire and personal emergency response.
“That success will come when [cable/telco] companies effectively market the services and convinces highly skeptical end users that the key part of these services — the certainty of response — will happen when potential subscribers trust the service for either security and medical response,” he writes in the briefing.
Louis Stilp founded InGrid Home Security in 2002, when he introduced one of the first wireless interactive platform options for more traditional alarm companies. In 2009, the firm rebranded as LifeShield Home Security. The following year, Mike Hagan, former CEO of NutriSystem, joined the company as CEO and helped Stilp raise $11 million in investment capital.
The Langhorne, Pa.-based company has since developed a successful DIY niche. Last June, LifeShield entered into a strategic partnership with Protection 1, where P1 would provide professional monitoring for LifeShield customers.