Residential Security Revenues to Grow 2% Annually, Says Parks Associates
Though residential growth is adequate, it is not as robust as industry players would hope due to the increased popularity of DIY security systems.
In addition to its own original research and partnering with SSI on the annual Residential Security Dealer Survey, Parks Associates references multiple different, yet equally important, sources to produce its forecasts.
Figure 1 below shows Parks Associates’ revenue numbers for the security industry in 2017 and forecasts through 2021. The forecast includes security systems, components such as IP cameras and smart home devices that accompany the sale of the security system, and monitoring fees.
So IP cameras, for example, sold independently of a security system are not in this forecast. They are in Parks’ smart home forecasts. The security systems themselves are both DIY and professionally installed. Systems are professionally monitored and nonmonitored.
The compound annual growth rate (CAGR) for residential security revenues is just over 2% in today’s dollar. While not spectacular, it is an adequate growth rate for a mature industry. However, it is not as robust as industry players want it to be.
The result is fierce competition, some new ideas, cost-cutting and, for some dealers, a new focus on additional or specialized markets. Light commercial and small business opportunities are studied carefully and seized where possible.
The technologies for small business smart devices is often the same as those used for residential environments, allowing some dealers a new avenue of growth.
The CAGR for the percentage of broadband households (Figure 2) with a security system and then with a security system and professional monitoring is about the same 2% as the CAGR for revenues.
The security system unit CAGR is a bit higher as there are more households in the U.S. each year, and while the rate of broadband adoption is slow, it is present. Thus, there are more housing units overall and a higher number have broadband capability.
Survey findings confirm a slow but steady marketplace, with dealers using smart devices as pick-me-ups. Growth occurs via moving and upscale consumers but more households than ever find DIY systems, available for less money and lower monitoring fees, acceptable. Dealers must find ways to shore up their customers while identifying differentiating use cases for their firms.
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