Report: Monitoring Revenue Will Help Home Security Market During Recession

Monitoring revenues are still the financial bedrock of the U.S. security industry, constituting 75 percent of all revenue, according to Home Systems: Home Security Update, which reports monitoring will cushion this market during the recession.

This new report from Parks Associates finds the number of monitored security households intending to cancel their service is only 4-8 percent higher than normal due to the economic downturn. The report also warns that the resilience of this service category will attract new competitors.

"Traditional security providers must anticipate communications and entertainment service providers will introduce their own home monitoring systems," said Tricia Parks, CEO of Parks Associates. "There have already been announcements in Canada and Europe for home monitoring using security as a primary application. It is reasonable to presume carriers will do the same in the United States."

Home Systems: Home Security Update reports the number of monitoring service subscribers will not increase as quickly now as in past years due to the drop in new starts and the lower number of households moving into new residences. However, the current base of customers shows a predilection to keep their monitoring services and will even tolerate a small fee increase.

"A slight rise in monthly fees, such as from $25 to $26.95, will not cause current subscribers to abandon their services," Parks said. "Security providers can use a minor fee increase to offset immediate losses due to slower market growth and increased competition. What is critical, nonetheless, is understanding the exact amount of increase that customers can bear."

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