For years, video surveillance was too costly for all but the most upscale of residential customers. But thanks to advances in video and communications technology, that’s no longer true. Some dealers now sell video to 10 to 25 percent or more of new residential accounts.
According to FCC data, about two-thirds of U.S. households now have broadband connectivity — typically a cable modem or DSL connection — and among households likely to purchase a security system, the percentage undoubtedly is even higher. Purchased to support home computers, those broadband connections also provide an excellent means of transporting video signals — and with the advent of cameras that communicate using the Internet protocol, there is no longer a requirement for residential video surveillance systems to include a costly digital video recorder.
Also fueling the rise of residential video surveillance is burgeoning smartphone usage. Increasingly, homeowners are equipped with smartphones or other wireless devices capable of viewing images from video cameras in the home over a secure Internet connection — either in response to a remote command from the homeowner or automatically triggered by the arming or disarming of the system or other event.
Some dealers monitor homeowners’ video systems through a connection to the central station. But dealers we spoke with said only a small percentage of residential video systems include monitoring — and some don’t offer monitoring for residential video systems. Instead homeowners are in charge of controlling and keeping tabs on their own video systems through a smartphone or other wireless data device or through a traditional Web browser.
“We call it ‘reality TV that’s worth watching,’” quips Gary Franklyn, vice president of business development for Security Networks, West Palm Beach, Fla. Security Networks offers several residential video offerings as part of its dealer program.
“The novelty is what intrigues them in the beginning,” comments Kevin Stone, chief operating officer for Rochester, N.Y.-based Doyle Security Systems. “Then they get used to it and like it a lot. People with second homes especially like to dial in to look at the weather.”
Other popular apps include viewing video of children when they arrive home from school, checking in on a housekeeper or determining whether a delivery service has left a package on the porch.
But even though today’s typical residential video system isn’t monitored, that doesn’t mean there’s no recurring monthly revenue associated with it. Dealers we spoke with typically charge $10 to $20 a month to give customers interactive, or look-in, capability. Typically that’s in addition to a $200 to $250 up front charge for each camera.
But some dealers also have experimented with other pricing models. Saylorsburg, Pa.-based Royal Security Services gives residential customers an indoor camera at no charge with an alarm system in exchange for a three-year contract at $40 a month, which includes alarm monitoring. In comparison, alarm monitoring alone runs about $30 a month, explains Royal Security Services President, David Manento.
About 8 percent of Royal’s residential video customers purchase at least one additional camera, Manento notes. Royal charges $259 up front for an outdoor camera and an additional $2 a month per camera.
Another pricing approach is to sell residential video as part of a bundled offering that includes home automation or other capabilities. Provo, Utah-based Vivint sells video as part of a home automation system for an upfront charge of $99 to $199 and monthly payments of $49 to $68 for 42 months, explains Vivint Director of Product Management and Business Development, Craig Pyle.
ADT also bundles video with home automation. A typical system includes home security, ZWave wireless capability, a thermostat, two cameras and a touch screen for an upfront charge of $1,200 and $57 a month, which includes alarm monitoring and storage of event-driven video clips for 30 days. (Some other dealers also offer a video storage option, while others rely on the camera, which typically has limited storage capability.)
At the other end of the spectrum, a few dealers offer video as a stand-alone system, not requiring the customer to also have a monitored alarm system. Beltsville, Md.-based ASG Security sells stand-alone residential video systems for about $200 up front and $25 to $30 a month, explains Jim Boots, vice president of sales and marketing for ASG.
Not surprisingly, many of the companies with the greatest success in selling residential video present it on every sales call — and live demonstrations are likely to be part of the sales process. “Our reps carry iPads and iPhones to show systems,” notes Jeremy Bates, general manager of Lexington, Ky.-based Bates Security/Sonitrol of Lexington. To give reps a video camera to check in on, Bates says, “we have a demo at the office — and some reps have them at their homes.”
ASG Security salespeople typically lead with an interactive solution and a big part of that solution is video, describes Boots. “If you lead with a conventional system, people develop the mindset that ‘that’s all I need’ and you have to upsell them after the fact,” he observes. But if salespeople focus on interactive capability from the beginning, it starts to sell itself, Boots says.
Most of the companies we spoke with do relatively little advertising specifically focused on video. Interface Security Systems of Earth City, Mo. gets much of its video jobs through referrals. “With video, people are passionate,” comments Mike Shirley, regional vice president at Interface. “It’s not their old boring system. It’s something cool they want to show their friends.”
But not every dealer relies on word of mouth. ADT, for example, features interactive video capability in the TV ads that it runs during sports programming. ADT’s ads are not product-focused, however. As Steve Shapiro, group director for ADT explains, “We don’t market technology; we show opportunities to help people with their lifestyle.”
Vivint also does TV advertising and its ads are very focused on home automation. “Among customers that called in to our 800 number after seeing a commercial we saw an attachment rate close to 80 percent for home automation,” Pyle notes.
Several dealers also have had success in selling interactive video to their existing customers — and even to customers of their competitors.
Security Networks gains a lot of customers through door-to-door sales and as Franklyn notes, having interactive video as part of the product portfolio gives salespeople something to talk to homeowners about — even if the home already has a security system from another company.
|Interactive Video Brings New Dispatch Challenges|
Today’s interactive apps give homeowners the ability to monitor their own video surveillance systems. That means there may be times when homeowners have to take responsibility for summoning police or emergency personnel. And as Pat Egan, president of Lancaster, Pa.-based Select Security notes, that may not be easy.
If a customer is away from home, he can’t just dial 9-1-1 because that may not connect him with the correct public safety answering point (PSAP). Complicating matters is the fact that PSAP personnel typically don’t know other PSAPs’ numbers, Egan explains.
The solution, Egan says, is “people have to call back to the alarm company with their password and ID number. I have a database of 10,000 PSAPs.”
|Less Labor on the Job|
One of the reasons dealers are able to sell video surveillance for much lower prices than they could in the past is that there isn’t a lot of labor required to install today’s systems. Dealers interviewed for this story typically cite a one-man, half-day labor requirement.
A big time saver is that some cameras use WiFi to send video to the homeowner’s broadband modem, eliminating the need to run wires. Some dealers use the homeowner’s existing WiFi network, while others install their own.
Indoor cameras are typically located in an entryway or foyer, although some customers prefer to have them looking out a window. Outdoor cameras are most effective at the front entryway or at the garage, dealers say.
Some residential video systems rely on interior motion detection built into the camera to generate alerts. Others are tied in with the alarm system, sending alerts whenever the system is armed or disarmed or a specific sensor is tripped.
|Premium Systems Include DVRs, Video Verification|
Although low-cost, self-monitored systems represent the majority of residential video surveillance sales today, some dealers have been successful in selling higher-ticket systems that include DVRs, central station monitoring or both.
Doyle Security sells about two “full-blown” video surveillance systems to residential customers each month, says Kevin Stone. “A DVR-based system could have 10 to 12 cameras and cost upwards of $15,000 to $18,000,” he reveals.
ASG also sells DVR-based systems, which typically have about four cameras and retail for about $2,495 with a $20 a month maintenance contract, says Carla McCaleb, ASG marketing manager.
Mike Shirley of Interface is a big advocate for central station-monitored residential video systems. “Our typical residential system is two cameras and a DVR integrated with their alarm system for video verification,” Shirley explains.
When video is included in a job, Interface’s RMR is about two times what the company earns on alarm systems. Included in the customer’s monthly charge are video verification and maintenance, as well as the ability to use an interactive smartphone app.
“Customers can look in on their property from anywhere at any time with our smartphone app,” Shirley says. “But they aren’t required to do that because the central station is also monitoring the system.”