The alarm monitoring market was valued at USD 42.88 billion in 2017 and is projected to reach USD 59.83 billion by 2023, at a CAGR of 5.5%.
Will DIY home security systems create opportunities for players in the alarm monitoring market?
Traditional alarm monitoring systems function on long-term contract model, and the contract fees in this model is set so as to recover the cost of installation and equipment. This model makes the cost of maintaining and setting up these systems out of reach for many buyers, thereby creating huge growth opportunities for a new business model called do-it-yourself (DIY) home security.
Several companies such as Scout Security, Honeywell, and ADT offer DIY home security products for middle-income earners, younger and relatively mobile homeowners, and renters. Most of the DIY home security systems offered by these companies are relatively cheaper than a professional alarm monitoring setup. These systems do not incur installation fee and are usually wireless and portable, which make them a better choice for renters and mobile home owners.
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How will telecom and cable companies entering the alarm monitoring space pose challenges to alarm monitoring market?
With telecom and cable businesses levelling off, players in these business are now looking for new growth avenues, and alarm monitoring is one of them. These players are leveraging their existing customers to enter the alarm monitoring market. The companies offer bundled packages, including internet services or cable TV services, along with alarm monitoring services, at a price competitive to traditional alarm monitoring companies. For instance, Comcast, an American global telecommunications conglomerate, which is the largest broadcasting and cable television company in the world, in terms of revenue, has recent launched the XFINITY home system. This system helps in round-the-clock professional monitoring. It also allows remote controlling of alarm systems. Also, Verizon, a telecommunication company, now offers a range of products and services for home security.
Over 40% of new security monitoring subscribers opt for a cable or telecom operator as their service provider. This shift in preference is posing a major challenge for traditional alarm monitoring players.
Attractive insurance policy discounts for installing security systems
Several insurance companies offer a discount in the insurance amount for installing and maintaining an alarm system with some form of central monitoring. Insurance companies offer maximum discounts in cases where the alarm system is connected to a central monitoring station. These monitoring stations alert the emergency services in case of an alarm.
It has been observed that several residential customers purchase security systems to benefit from the lower insurance premium rates that are offered to the house owners who have installed security systems. Besides, certain other insurance policies make the installation of security systems at homes mandatory to avail coverage of the policies. Insurance companies offer discounts on the purchase of home security systems, especially to those connected to the fire and local police departments. Insurance companies give discounts in the range between 5% and 20% for different security measures installed in houses on the basis of the home owners’ policy. The discount varies from 15% to 20% for homes that are equipped with burglar and fire alarm systems. These discounts are mainly offered as it is believed that houses equipped with security systems are 60% lesser prone to burglary attacks than the houses without security systems. Hence, this factor boosts the demand for security systems.
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