Home security companies have avoided the worst of the recession due to a stable core of consumers who have kept their monitoring services despite rising fees, according to research firm Parks Associates.
In its latest report, “Home Systems: Home Security — Analysis and Forecasts,” the firm finds the average monitoring fee for a U.S. household increased 15 percent, from $28.60 to $32 between 2008 and 2010. This rise has kept revenues from home security relatively stable despite declines in overall sales due to weak home sales and catastrophic drops in new starts, according to Parks Associates. This strategy relies on a group of existing customers who will retain their service despite rising monthly costs, which has been successful but has its limits.
“IP technologies open the door on all industries to new, nontraditional competitors,” says Parks Associates CEO Tricia Parks. “Moving forward, the security industry must be careful not to raise monthly fees too quickly, or it risks accelerating entry of these new players. Continued aggressive fee increases may create short-term benefits but risk long-term turbulence. Instead, security companies need to reposition to win new customers, rather than expecting their existing customers to carry the burden.”
The report provides an overview of the U.S. residential security market. It includes an assessment of the current and future market, consumer data on monitored security households, a review of dealer activities and challenges, briefs on selected industry players for equipment and monitoring, market forecasts, and scenarios for the future, including potential catalysts and inhibitors to market health.
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