News
Connected services drive growth and opportunities in remote monitoring markets
June 2016 by Tim Hewitt, market analyst, remote monitoring and smart home, IHS Technology
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.
