ESA Trends Research Presented at ESX Highlights Sea Changes in Consumer Demand, Integrator Approach to Residential Market

We caught a first whiff of this at the ESA Leadership Summit in Dallas early this year. During a panel discussion that included Vivint COO Alex Dunn, ASG CEO Joe Nuccio and ESA Treasurer David Koenig, a clear consensus emerged that, despite a couple of years of miserable news on housing, the residential market was suddenly of high interest, again.

As with any powerful trend, the drivers were both threat and opportunity. The threat?  Rising residential account attrition as consumers terminate POTS and, with them, alarms too infrequently used. The opportunity? To create a stronger and even more valuable RMR relationship with consumers based on a broader range of products and services including system access from mobile devices, video, remote control door locks, energy management and lighting control.

With that interest clearly expressed by ESA member companies large and small, it was obvious what ESA’s next major research project should be: a deep dive on where members are in the evolution of their residential offering and better data on the size and contours of consumer demand for the broader set of products and services.

ESA launched two surveys to get at this information. The ESA Member Target Trends Study was fielded in late April and generated responses from roughly 150 members. The ESA Home Systems Survey went in the field to consumers in early May and generated over 500 responses. Together, they provide an invaluable snapshot of the evolving residential market and how members are planning to address it with a variety of new offers. In this article, we focus on the ESA member integrator survey.

One of the most compelling data points from the member survey is a look at the average percentage of residential system installations including non-alarm features in 2011 and 2012 (Chart 1). There is growth in all categories, but it’s strongest in categories like HVAC control, lighting control, keyless door locks and home automation. Chart 2 shows the rapid growth rates projected over just two years’ time.

Another telling statistic is percentage of residential installation revenues attributed toproduct categories other than alarm systems and components (Chart 3). ESA members see non-alarm revenues rising from just 16 percent in 2009 to 37 percent in 2013. Astute industry observers like Vivint’s Dunn and Interlogix president Bob Haskins believe the trend line in the survey is conservative and would not be surprised to see non-alarm residential installation revenue at more than half by mid-decade.

In this survey, we also tried to get at some of the more qualitative aspects on the changes, including the reasoning behind growing interest in non-alarm categories and inhibitors to greater involvement. Charts 4 and 5 interestingly show home automation and its new recurring revenue profile is hot and that business model and sales and marketing concerns (not installation) are the biggest inhibitors to more aggressive involvement in non-alarm categories.

Find out even more about this research by downloading the entire report at ESXperience, free to security integration and monitoring companies. Want to go deeper on the data? Contact John Galante at jgalante@ae-ventures.com.