After years of hovering around 20%, the adoption rate for home security services in the US bumped up to 23% in 2014. One big reason for the increase? Cable and telecom companies are gaining significant traction with their new smart home offerings.
According to Parks Associates, 40% of new home security subscribers are signing up with non-traditional providers, and cablecos and telcos are reaping the benefit.
"The telecom and cable operators are taking a substantial portion of the strong growth in the market, thanks in part to their ability to include security in triple- and quad-play service bundles," says Tom Kerber, director of research for home controls and energy at Parks Associates. "Interactive service providers are experiencing dramatic growth, as the portion of new professionally monitored security subscribers that include interactive services and home controls continues to climb."
Security is still the bedrock of the smart home, but getting customers in the door with security also gives service providers the opportunity to upsell into other home automation areas. While traditional providers like ADT Corp. still own 75% of the security market, broadband companies are gaining ground and helping to educate consumers about the potential advantages of expanding from home security into energy monitoring and appliance automation applications.
The trend is good for cable and telco operators for two reasons. First and foremost, it helps them further monetize the broadband pipe to the home. Second, it gives them entry into a broader Internet of Things market, which is still being defined. Connecting sensors and appliances in the home is one thing, but consumers will ultimately be networked not only through their home devices, PCs and smartphones, but also through connected cars, shopping interactions, new entertainment applications and more. Managing service across all of these touch points will be big business, and that's not even taking into account the long-term analytics play and the value of the behavioral data collected. (See Icontrol Adds Analytics for Smarter Homes.)
Not all is rosy in the smart home market, however. Even as adoption of home security services rises, there have been reports of a slump in demand for individual connected home devices like smart thermostats and door locks. This may be in part because of reliability problems with early hardware, but it's also a function of the fact that the smart home market remains in its early stages. The industry is still in the process of solidifying standards and protocols to help connected devices work together, and consumers are still struggling to understand the value that smart home devices can bring. (See Analysts Predict Smart Home Slow Down.)
In the meantime, service providers like AT&T Inc. (NYSE: T), Comcast Corp. (Nasdaq: CMCSA, CMCSK) and yes, ADT, are working hard to drive the market to its next stage of maturity. Apple Inc. (Nasdaq: AAPL) and Google (Nasdaq: GOOG) will also have an important say as the mobile and smart home industries continue to converge.
— Mari Silbey, Senior Editor, Cable/Video, Light Reading