ADT on Monday announced that it has acquired LifeShield, a pioneer in the do-it-yourself (DIY) home security space, in a deal valued at approximately $25 million.
This is the third time in six years that ownership of LifeShield has changed hands. The company, which was founded in 2004 and was the first to bring a wireless DIY security solution to the residential market, was purchased by satellite TV giant DIRECTV in 2013 as cable and telcos were ramping up their presence in the home security industry. However, following AT&T’s acquisition of DIRECTV the following year, LifeShield would be put on the auction block once again and eventually acquired by private equity firm Hawk Capital Partners in 2017.
“As more consumers look for real protection solutions that only ADT can provide, we look for companies that share our passion for security, customer service, and innovation,” ADT President and CEO Jim DeVries said in a statement. “We are confident that LifeShield’s capabilities and approach, combined with the brand and scale of ADT, will create an opportunity for us to offer our services to a broader cross-section of U.S. households. Together with LifeShield, we will be positioned to offer more solutions to a broader base of customers and create increased value for our shareholders as we seek to grow profitability through expanded, yet focused offerings.”
“This combination unites the passion and commitment of two organizations that are focused on security,” added Mike Hagan, LifeShield Chairman, who will continue as an advisor. “Leveraging ADT’s significant experience integrating products, we look forward to working together to ensure a seamless transition and capitalize on the attractive market opportunities in the DIY segment. Together we will continue to advance our strategy to deliver the best security solutions to our customers at every stage of their lives.”
According to the statement, LifeShield CEO John Owens will continue in his current role leading the company’s team.
Industry Impact
Blake Kozak, Principal Analyst for Smart Home and Security Technology at IHS Markit, says ADT’s purchase of LifeShield demonstrates the need for industry firms to have a diversified approach to home security and monitoring.
“Although ADT and SmartThings had partnered for a starter kit capable of being professionally monitored, reception of this product has been modest at best, with heavy price reductions since the holiday shopping season of 2018,” he says. “Brink’s Home Security (formerly MONI/LiveWatch), have been very active in combining DIY with professional services – from the original acquisition of LiveWatch to partnering with Nest.”
“What this means for ADT is that combining DIY installation with professional monitoring could see a big increase in 2019 and 2020 — especially since SimpliSafe revamped their offering, Ring came to market with $10/month monitoring and now Arlo announcing a security kit (although) the pro-monitoring option is still pending,” Kozak adds.
Kozak also doesn’t expect a significant ramp up in the DIY segment by ADT will have much of an impact on their professional dealer base. “ADT could work out a program similar to DragonFly offered by Honeywell a few years ago, where dealers get a cut of each online order or dealers could offer the DIY system with the monthly monitoring plus concierge services on top,” he explains. “Also, one feature of LifeShield is the option for professional installation instead of self-install.”
All things considered, Kozak doesn’t expect the acquisition to have much of an impact on ADT’s current market share unless they make some substantial changes to the LifeShield product line and RMR structure. “Despite LifeShield being a DIY offering, the monthly subscription for monitoring is on-par with the rest of the pro-monitoring industry, which also includes $99 activation fee and a 36 month contract,” he says. “Consequently, this will help ADT compete more with brands such as Frontpoint, Scout Alarm and Brink’s Home Security but the pricing and portfolio of LifeShield will likely not have a major impact on ADT’s market share.”
“If ADT was able to overhaul the existing product line of LifeShield and come to market for a monthly subscription fee similar to Ring, this could have much larger (positive) implications for ADT’s market share,” Kozak concludes.
About the Author:
Joel Griffin is the Editor of SecurityInfoWatch.com and a veteran security journalist. You can reach him at [email protected].
