While it seems obvious that the smart home and the Internet of Things (IoT) have quickly become the driving forces behind a rapidly increasing remote monitoring market around the world, there has been disagreement among industry analysts and experts when it comes to the sheer amount of growth that connected systems will provide.
Still, according to a new report from IHS Technology, the American market for remote monitoring services is nearly as large as the entire European and Asian remote monitoring markets combined — with American penetration rates expected to increase still further through the year 2020. That projects to a healthy increase to the $25 billion worldwide value the market had in 2015.
“Some industry experts believe market penetration for monitored security will only increase a little, and the connected market will offer growth through increased revenue opportunities within the existing customer base,” writes IHS market analyst Tim Hewitt. “Others are expecting a surge of new customers, caused by new functions and better technology, resulting in penetration increasing by double digits by 2020.”
According to Hewitt, in 2015, the connected residential monitored security market in the Americas was worth $3.1 billion — about one-third of the size of the traditional monitored security market, valued at $9.4 billion. The traditional market is expected to decline, as services transition over to connected systems, resulting in the two markets reaching equivalent sizes by 2020.
Effect of IoT
There are numerous factors to consider when assessing the effects of the Internet of Things (IoT) phenomenon on the monitoring industry — both in terms of the number of accounts and total revenue, the report says. They include:
- Connected system technologies are bringing monitored security to more consumers as the technologies become more accessible, available and functional.
- Telecommunications companies — Comcast, AT&T, Time Warner Cable and others — continue to put pressure on the North American remote-monitoring market. The solutions these companies offer are connected systems, providing additional functions including remote notification and alarm system control.
- Telecommunications companies have increased market awareness of monitoring and smart home solutions, through large marketing and advertising campaigns.
- Additional smart home services and devices are often offered alongside monitored security solutions. Video devices are one of the most successful products in this regard, with cloud storage and other associated services offering additional RMR opportunities. These options allow providers to increase their average revenue per user.
- The market for do-it-yourself (DIY) installed and self-monitored connected systems is growing. These systems offer lower ongoing costs and often provide enough consumer peace of mind for the reduced cost. As the reliability and accessibility of these systems increases, they will become increasingly competitive with the residential remote-monitoring market.
- For consumers who prefer an element of professional monitoring, ad-hoc monitoring services offering contract-free, short-term monitoring, are serving this emerging market.
“The commercial market is also gaining the benefits of increasing technology adoption,” Hewitt writes. “The video-monitoring market is a key growth area for the large commercial sector, driven by improving broadband infrastructure, increases in video analytics capabilities and decreasing costs of equipment.
“Existing service providers will need to keep up with technology adoption within the industry, as service providers look to differentiate their products and increase their revenue per user within an increasingly competitive and widening market,” he concludes.
To access the full report (on a subscription basis), visit https://technology.ihs.com/578277/remote-monitoring-services-report-2016.
