New Security Products and Services Pros Should Consider Offering in 2020

Consumer expectations regarding the standard features of security solutions are shifting. Leverage this opportunity to attract new customers, as well as prevent loss of current subscribers.

Editor’s Note: SSI has partnered with Parks Associates for the creation of DIY FYI, a column designed to help dealers keep track of important smart home market developments, what the competition is and whether they want to jump into something they see as a new opportunity.

The residential security industry is experiencing positive change, with the growth in self-installed systems creating more options for both consumers and providers.

Availability and adoption of DIY security systems are on an upswing, and consumers have more options than ever before, including solutions like Frontpoint, which requires professional monitoring, and SimpliSafe, which offers optional pro-monitoring.

The percentage of security systems sold in 2017-2019 that were self-installed increased from prior years, and sales of traditional installed security systems also remain healthy for these years.

Despite these positive factors, certain areas of challenge persist. Increased competition puts more pressure on equipment pricing and RMR. Moreover, with DIY players gaining more exposure through robust national advertising, traditional players like ADT and Vivint are forced to spend heavily both to retain their customers and attract new prospects.

To offset the increased cost of acquisition, players need critical mass, and as a result, they are continuing their consolidation and expansion efforts.

Consumer expectations regarding the standard features of a security solutions are also shifting. Basic system interactivity — the ability to interact with the security system via smartphone, tablet, or computer  is essential. Many players provide this feature as standard in the initial purchase.

Interactivity with additional smart home devices has also increased, although security providers, particularly traditional players, often struggle with the sale of adjacent devices. Networked cameras sell well, and video doorbells are having success, but providers need stronger holistic explanations for selling across device categories, including energy and convenience.

Leveraging this opportunity is important in attracting new customers but also to prevent loss of current subscribers. The rate for switching monitoring providers nearly doubled in 2017 and 2018 as a result of players like AT&T Digital Life leaving the business and strong cannibalization efforts by players such as Comcast. Attrition has decreased a point or two, but more progress is necessary to impact profitability significantly.

 

Security providers must position their firms to leverage these opportunities quickly, as market drivers can accelerate quickly and attract new demographics or consumer segments.

  • As IoT technologies mature, new features and value propositions emerge that resonate with consumers previously underserved by this industry.
  • New housing also drives adoption. Home construction in the US surged to the strongest levels in more than a decade in August as housing starts and building permits each jumped to the highest monthly rates since the first half of 2007.
  • New technologies will replaces legacy technology, triggering a shift in adoption. For example, the 3G sunset will require a change among millions of panels throughout the U.S.
  • New partnerships with insurance or health companies, which benefit from active sensors in the home, can lower fees, reducing the cost barrier that has traditionally prevented many households from adopting security.

Security at CES 2020

The type of disruption and the players — device or system — that will emerge are speculative, but CES 2020 offered a hint at future directions with a showcase of new innovations, which illustrate a number of trends that will and are impacting the security space.

The need for a standalone camera is apparent as security companies continue to bolster their product line with these devices. Networked cameras can serve as both competition and as a complementary device to a security system.

  • Abode, a DIY security system provider, introduced its indoor/outdoor security camera, in response to demands from its customers. The company found that it needed to incorporate a networked camera for those consumers who would otherwise consider a camera to deliver all the safety and security benefits they wanted. Its indoor/outdoor camera also has the ability to be the video doorbell of the home with a doorbell mount.
  • ADT, the leading professional security provider, introduced Blue by ADT. This line of standalone cameras includes an indoor camera, an outdoor camera, and a doorbell camera. Facial recognition, smart alerts with animated previews of what the camera detects, and the ability to customize motion-activated detection zones are all features that are included with the devices.

Safety and security move beyond the home and its perimeter to on-the-go experiences.

  • ADT announced a partnership with Lyft, enabling all riders to engage with emergency responders through the Lyft app. With a new safety tools tab within the Lyft app, riders can contact 911 directly or have a text conversation with emergency services. ADT also has an SOS-based standalone app called SoSecure.
  • WaryMe, a French startup, showcased a safety mobile application that enables users to use mass notification features to alert others in a time of crisis or unsafe event. The app connects users directly with the local safety authority if a critical situation occurs.

Security solutions target verticals and services that add additional value beyond strictly security.

  • Alcidae, a camera manufacturer, showcased a camera called the Garager 2, which attaches to a garage door opener specifically made for use cases in the garage.
  • Chamberlain bolstered its home delivery services by incorporating built-in cameras to its smart garage door openers from LiftMaster. This update allows consumers to monitor any delivery transaction in real time. Parks Associates research shows nearly half (48%) of consumers who own or intend to buy a smart door lock, smart garage door opener, or video doorbell find the ability for their access control devices to allow package deliveries from Amazon to be valuable.
  • Alarm.com, an interactive service provider, released its smart water valve and meter device to enable consumer to monitor and identify low- and high-volume water leaks as well as overall water usage.

The rise of DIY and networked cameras as an alternative to a security system, mobile security, and additional value opportunities all serve to improve the appeal of security systems, devices, and services for consumers. The shift away from traditional security offerings is necessary for the industry to move forward and expand.

Visit Parks Associates at upcoming industry events: 2020 Barnes Buchanan Conference;  ISC West; and CONNECTIONS: The Premier Connected Home Conference. For more information about Parks Associates research, visit www.parksassociates.com.

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