DirecTV's acquisition of LifeShield a sign of things to come?

Analyst says deal could be a precursor to more industry partnerships, M&A activity

Whereas bigger dealers have the resources to fight back against this continued incursion from companies outside the traditional security space, Kessler believes that it will be the smaller firms that stand the chance to be hurt the most by new market entrants. “I think where the real risk in the security industry is involved is in many of the smaller companies who don’t have the financial wherewithal and the capital capacity to invest in some of these software platforms,” he said.

While the market penetration for home security systems has been stuck around 20 percent for some time, many analysts feel that number will increase steadily in the coming years as security systems move away from what has traditionally been viewed as a negative cost with the evolution in home service capabilities.

“The reason why we think the penetration is going to improve dramatically now is the value proposition has improved dramatically with these new software platforms,” Kessler said. “You can now control your system remotely, you can contact and deal with the monitoring station or the police remotely, you can see and you can hear what is going on in your premises, and you can monitor people in the house for health reasons. On top of that you can add a whole bunch of home services if you want –ranging from thermostats to lighting and automation of the home. In fact, you can basically order pizza off of the same PDA in your home control platform.”

Despite their national footprints and large marketing budgets, Marinace remains skeptical of these new market entrants' ability to deliver the quality of service that consumers are accustomed to when it comes to security.

“We’ve seen these large players come into the industry before,” says Marinace. “I’ve been in the business almost 40 years and over the years, predominantly what has happened is that they’ve come into the industry with a big bang, they’re around a few years and they see that it might not be for them and they fail. There is high-mortality rate for them.”