Connected services drive growth and opportunities in remote monitoring markets
The internet of things (IoT) is driving advances in technology and functionality in many industries, and the remote monitoring industry is no exception. New market data from IHS estimates the global remote monitoring market was worth $24.7 billion in 2015. Connected systems and services are expected to play a large role in the growth of this industry in the coming years.
The American market for remote monitoring services is the largest regional market - nearly as large as the entire European and Asian remote monitoring markets combined. This region is expected to experience high penetration in the residential sector, which will increase still further through the year 2020.
There is wide agreement in the industry that connected systems and services will lead growth in this market. However, there are vast differences in opinion when it comes to the magnitude of growth that connected systems will provide. 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. Others are expecting a surge of new customers, caused by new functions and better technology, resulting in penetration increasing by double digits by 2020.
There are numerous factors to consider when assessing the effects of the IoT on the monitoring industry, both in terms of the number of accounts and total revenue.
They include the following:
As they become more accessible, available and functional, connected system technologies are bringing monitored security to more consumers Telecommunications companies continue to put pressure on the North American remote-monitoring market - led by Comcast, AT&T, Time Warner Cable and other providers. The solutions these companies offer are connected systems, providing additional functions including remote notification and alarm system control. Telecommunications companies have also 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 recurring revenue 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.
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.
The industry is expected to grow strongly into 2020, but much of this growth is due to increasing revenue generated by each user, rather than an increased number of accounts. While the number of smart-home systems will indeed increase the penetration rate of monitored security products, the market is only expected to grow 1 percent by 2020.
The European market has also begun the transition to connected services and systems. However, this transition is happening slower than in North America. The slower transition is due to more fragmented markets and a lower penetration of security solutions in the residential market. Adoption is strongest in the Nordic region of Europe, where a relatively high penetration rate for monitored security and high technology adoption provides ideal market conditions for service providers to make the transition earlier. More opportunities for energy management solutions are expected in the European market, than in the Americas, due to rising energy costs in many countries.
The commercial market is also gaining the benefits of increasing technology adoption. 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.
About the report
The IHS Remote Monitoring Services Report provides marketing and technical executives with an up-to-date, comprehensive assessment of the market and forecasts the impact of significant trends over the next five years. The report provides detailed estimates of market sizes in 2015 and forecasts growth for the period 2016 to 2020. The report also estimates the market shares held by the major service providers in each service type and major geographic region. The specification of this study was developed in conjunction with numerous leading providers of remote monitoring services. As a consequence, the report focuses on key issues that are fundamental to an in-depth understanding of the current structure and future development of this market.