It used to be that a strong deadbolt was the end-all be-all of home security. But times have changed. These days, people across the world are investing their hard-earned dollars in home security. Systems could range from light sensors or security cameras to a suite of integrated "smart home" solutions. Together, security products are big business. The global security market is slated to surpass $100 billion by 2020. Home security systems will account for an estimated $47 billion of the total security market. Here's what's driving the astronomical growth of home security.
People are increasingly focused on security.
Never mind that crime rates have been steadily declining for years. Consumers are more concerned about security than ever before, especially in residential areas. This unease is a substantial contributor to the growth of the home security market.
Technological progress is changing what's possible.
Tech upgrades are hugely expanding the functionality of electronic security systems. This includes wireless integration and other "smart home" features that provide greater flexibility and convenience for consumers. As an added bonus, smart features are becoming more financially accessible as tech progresses. These attributes are expanding the home security market in two ways:
- They're increasing home security systems' market penetration.
- They're driving demand for replacements and upgrades.
As a result, 70 million smart home devices were shipped across the U.S. in 2016. That number is expected to grow exponentially this year.
DIY home security systems are on the rise.
DIY home security solutions--in which homeowners install and monitor the systems on their own--are in high demand. Consumer interest in these products is high enough that many have been funded by Kickstarter projects that raise millions of dollars. Startups aren't the only ones making money off the DIY demand. Products from corporate titans (such as Google's Nest and Dropcam) are also diversifying the market. (In most cases these have been acquired, not developed by the big corporations themselves.) Investment firms have also spotted an opportunity in the DIY home security market. For example, Sequoia invested early; in 2014, the firm dumped $57 million into SimpliSafe, which offers self-installed security systems. All told, DIY systems are on track to take over 34 percent of the home security market by 2020. They're also projected to account for more than 62 percent of the market by 2035.
Younger consumers are driving demand.
Millennials' consumer preferences are spurring growth across industries, and the home security market is no exception. DIY home security solutions are especially enticing to consumers under the age of 45. Their growing participation in the market is a major factor in the industry's overall growth.
Insurance company are offering discounts.
Insurance companies have started extending home insurance discounts to homeowners who utilize monitored security systems. These discounts can be as large as 30 percent. Not only do discounts reduce insurance premiums, but they also help cover the costs of adopting a home security system. This incentive is another factor spurring the growth of home security.
Telecom companies are getting in on the action.
The profitability of home security systems has become ever more apparent. That's resulted in intense competition within the industry as startups and big-name corporations duke it out. The participation of major brands has validated and helped spur investment in the industry. Competition has gotten even fiercer as telecommunications and cable companies get in on the action. AT&T, Comcast, Time Warner Cable, and Verizon all offer home security solutions, many of which are bundled with other services such as cable and internet. From changing consumer demographics to tech advancements and telecoms' participation, an array of factors have aligned to make home security a massive industry. The market is expected to grow through 2020, and there's no sign it will slow down after that.