Find news and information for the executive corporate security director, CSO, facility manager and assets protection manager on issues of policy, products, incidents, risk management, threat assessments and preparedness.
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B ack in 2010, Comcast entered the security market, followed in subsequent years by Time Warner Cable and AT&T;, and the alarm industry certainly took notice. It wasn't panic, but it was definitely more than a blip on the radar for industry experts and alarm dealers, who saw this foray of new and large players into the market as both a threat and an opportunity. In actuality, this wasn't a new thing at all. In researching AT&T;'s move into security in 2012, security industry analyst Jeff Kessler, manag- ing director of Imperial Capital, told SecurityInfoWatch.com that many of the telcos attempted to make a foray into the home security market about 10 years ago, but they didn't gener- ate a lot of earnings and most of them eventually sold off their security assets. Could history be repeating itself ? In late June, industry research firm IHS published some interesting — and to alarm dealers, encouraging — numbers as it relates to what it calls "multi-system operators" (MSOs) and their success in the security market- place. "Although MSOs have made significant inroads into the residential alarm market, they still have a long way to go before they can claim to have truly conquered the traditional security provider's stranglehold on demand," writes Jim Dearing, a resi- dential security analyst for IHS. According to the research, just 0.4 percent of U.S. fixed-broadband sub- scribers purchased a residential alarm system from an MSO in 2015. IHS intruder alarm equipment shipment forecasts indicate this figure will not exceed 1 percent before 2020. Further, just more than 343,000 residential alarm control panels were sold to MSOs in the Americas region in 2015; whereas shipments of residential pan- els to the professional security sector in this region exceeded 2 million units. One of the fears that alarm dealers cited as these providers gained market share was the fact they have so much potential reach — money to spend on marketing and huge customer bases that already purchase a service. We have learned, of course, that this is absolutely a double-edged sword. "ere are only so many times an MSO can call an existing customer and offer them additional products or services without aggravating them to the point of cancelling their contracts," Dearing writes. Starting just a few years ago, the marketplace was flooded with security advertising spearheaded by the "big fish," and it continues today. And while some security-first companies like ADT have the capital to swim in that marketing pool, the vast majority of alarm dealers cannot — so they let the big boys do the advertising for them. e strategy seems to be working, as residential security and smart home awareness has skyrocketed. e residential alarm industry would be wise to stay the course — capitalizing on increased awareness to increase its market share by offering the personalized, superior customer service that comes with a product that should be perceived as far more important than just an add-on to tele- vision or Internet service. In fact, a repeat of history would mean we may see a flood of newly orphaned security customers. "Huge budgets also come with strings attached," Dearing concludes. "If (MSOs) don't acquire a certain number of subscribers or accept- able levels of profitability by a certain date, companies might close down the home security division, in order to free up budget to pursue other revenue- generating opportunities." ■ 8 Security Dealer & Integrator / www.SecurityInfoWatch.com July 2016 Editor's Note BY PAUL ROTHMAN Paul Rothman — Editor-in-Chief @SecurityDealer www.facebook.com/SDIMag www.SecurityInfoWatch.com/sdifast50 http://bit.ly/SDIonLinkedin MSOs have a long way to go before they can claim to have truly conquered the traditional security provider's stranglehold on (residential security) demand," IHS says. No Big Deal? Research says telecoms and cable providers are finding the security road a tough one to travel