MSOs hone in on home security


ComcastConsumers are increasingly turning to an unlikely source for home security – the cable company. For companies such as Comcast and Time Warner Cable, home security is another revenue stream to rebuild margins whittled away by rising programming costs and declining video subscriber numbers. It is also a way to put to work the billions of dollars that cable companies have invested to create high-speed video and data services over the years, reports Reuters.

And home security subscribers tend to stick around for an average of seven or eight years, according to industry estimates, unlike fickle cable TV subscribers who can be lured away by enticing deals from satellite and telecom rivals.

Cable companies “are under pressure on their traditional lines of business so there’s some urgency added to add more revenue,” said Jim Johnson, executive vice president of iControl, the main home security vendor for Comcast, Time Warner Cable and Cox Communications.

Comcast, for one, markets the service via flyers to existing subscribers. Its Xfinity home product service includes cameras and sensors, as well as other features that allow him to control the thermostat and lights from a smartphone or PC.

The good news is the service can be bundles with other services, so $49 a month for the security service is part of a $209 bill that includes cable TV, phone and Internet. This is after an initial investment in the gear that can be in the hundreds of dollars, said Reuters.

Comcast, the largest U.S. cable operator with 22 million video subscribers, entered the security market in 2010 and has not revealed subscriber numbers.

Time Warner Cable, which serves 12 million video customers, has 30,000 subscribers for its security business, incoming CEO Rob Marcus said at a recent investor conference. Consumers can now “watch what your dog or cat or nanny are doing during the day,” he told investors.

TWC just started selling the service in New York City, its last big untapped market for home security. Adam Mayer, vice president of Time Warner Cable’s “Intelligent Home” unit, told Reuters the company may create special packages for apartments to crack into wider parts of the New York market.

Privately held Cox, which does not say how many subscribers takes its product, said it plans to take a “healthy percentage” of a potential $1 billion market in the areas in which it operates, a spokesman said.

The MSOs are up against incumbents that include ADT, Protection 1 and Ascent’s Monitronics. ADT alone has 6.5 million customers, about a quarter of the U.S. market.

Price is emerging as a key battlefield, with Comcast, Cox and Time Warner Cable offering discounts if customers combine home security with other services. That puts the prices for home security at $30-$50 per month, slightly below what ADT charges for its new “Pulse” product.

Comcast Xfinity Home executive Mitch Bowling said that half of its security customers are new to the company, that 96% of Xfinity home customers buy at least two other Comcast services and two-thirds of these customers have never bought home security before.

Wireless carrier AT&T, which rolled out its home security and automation service in 2011, is planning to offer services in more than 50 markets by the end of 2013, ahead of their original plan, and go national in 2014. Glenn Lurie, the head of AT&T’s emerging devices business, said such services could eventually reap $1 billion a year.

Verizon has a product, but it does not connect consumers to the police or other authorities in an emergency.

DirecTV acquired a home security company called LifeShield in June. It will begin trials for the service in Q4 and release it nationally in the first quarter, DirecTV Chief Revenue and Marketing Officer Paul Guyardo said. Home security and automation is a low-churn, high-margin business that compliments DirecTV’s video business, he noted.

Not every cable company is charging into the market. Charter, Cablevision and Dish Network do not have products. Dish said it is “constantly evaluating opportunities” while Charter said it is focusing on its core business.

See the Reuters story here

RBR-TVBR observation: MSOs are really in a good position. With that one pipe coming into the home, they can offer just about any service that relies on the delivery of data. With the bundle packages, they can ensure their customers take most everything they offer—a la carte options are always more expensive. From a consumer standpoint, it’s good to have more than one provider of these bundles in many markets. Your current bundle provider is willing to make deals to keep you on past the two-year contract. If not, you can always switch to the better package.