Market Insight

Comcast’s Rise and Its Impact on the Professional Security Intruder Alarms Market

May 10, 2017

Anna Sliwon Anna Sliwon Analyst II, Security

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Highlights

  • Challenges to the professional security equipment market emanating from players outside the industry have grown significantly over recent years.
  • Recent subscriber milestone announcements from both Comcast and ADT suggest that the competition is intensifying every year. Furthermore, customers increasingly are demanding additional functionality from their intruder alarm systems, which would allow them to easily and securely connect to other in-home smart devices. 

Multi-Service Operators Becoming Disruptive

  • In recent years the multi-service operator (MSO) market has grown to pose an increased challenge to traditional security providers, and the latest Comcast press release including the number of subscribers confirms just how serious the challenge is.
  • According to the IHS Markit intelligence service, Intruder Alarms and Monitoring Services, the traditional alarm monitoring market will shrink at four percent compound annual growth rate (CAGR) between 2016 and 2020, while the connected monitoring market will experience a 15.9 percent CAGR for the same period.
  • MSOs have approached smart security as a way of growing the number of customers and reducing attrition rates by offering security packages which include additional functionality, enhanced user experience and ease-of-use, while also providing the ability to connect with a wide range of smart devices available on the market.
  • Many MSOs have been able to take advantage of their wide footprints and existing customer bases to convert existing customers and bring new customers to the security (smart home) category.
  • Converting existing customers has been one of the primary strategies of many security service providers. However, MSOs often are working with tens of millions of existing customers while even the top security service providers have fewer than seven million total residential customers to convert, giving MSOs a distinct advantage.

Comcast’s Role in Professional Security Monitoring

  • In essence, Comcast demonstrated success in taking advantage of its wide array of services while taking into account customers’ needs by releasing an inexpensive, innovative package and constantly improving its products quality and reliability, with R&D investment reported at $1.8 billion.
  • Comcast has been able to achieve subscriber growth of 90.4 percent CAGR since 2010, when Xfinity Home was first unveiled.
  • Moreover, the latest merger with IControl is likely to open up additional  opportunities for growth. This may bring additional challenges to professional security equipment manufacturers and service providers (such as ADT), particularly if IControl’s Converge platform and Comcast’s Xfinity products begin to be offered through sales channels normally reserved for the professional security market: dealers.

Traditional Security Providers Trying to Maintain Share

  • The professional security market is working to respond to the changing dynamics of the market and ADT has been leading these efforts. The company, which launched connected home security offering Pulse in 2010, reached two million subscribers in 2017.
  • ADT’s convergence in connected monitoring accounts has been largely drawn from converting its long-established base of subscribers to traditional alarm monitoring services.
  • On the other hand, Comcast has been able to attract customers who have never used security equipment before, which will have strong knock-on effects for the intruder alarms market.

Future Could Belong to MSOs

  • If Comcast and ADT continue to convert their subscriber base to smart security at a similar rate with which they achieved their 2017 milestones, by 2025 ADT will reach a nearly 100 percent conversion of its existing residential subscribers, requiring it to devise a new strategy of increasing the total number of subscribers. Its current total number of subscribers is estimated at nearly seven million, most of which are residential customers.
  • Conversely, Comcast currently has more than 22 million subscribers, and by 2025 its conversion rate will be much lower, at less than 20 percent of ADT’s, which will present a greater opportunity because Comcast will not have to rely as heavily on a greenfield customer base.

Research by Market
Security Technology
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