With the deal, DirectTV joins a number of cable operators and telecommunications companies, such as Time Warner, AT&T and Verizon, which have decided to offer home security services. There’s even a whisper in the local market Telstra has plans to hit the low cost residential market.
The reason the pay-TV distributor decided to join the space is to look for new revenue streams for the company, according to Robert Mercer, a spokesman for DirectTV.
“In general, the video home security business is a good strategic fit for us,” he told SSI. “It’s profitable and has low market penetration. We didn’t want to rush into the home security business just to compete with cable companies and others offering home security unless the right opportunity came along. Ultimately, it did with LifeShield.”
DirectTV will begin marketing LifeShield products and services under the LifeShield brand in the first quarter of 2014. Protection 1, which provides monitoring for current LifeShield customers, will continue offering its services.
With 22,000 subscribers, Langhorne, Pa.-based LifeShield brings in roughly $US15 million in annual revenue. LifeShield CEO Mike Hagan will continue to operate the security business, and will continue to manage his 105-member team at its headquarters.
Although DirecTV looked at several home security firms, LifeShield proved appealing for its “innovative, yet easy to use and install, and we would be able to seamlessly integrate the service with our video experience,” Mercer says.
“We already make millions of in-home visits to our customers every year, and with this deal, we’ll be able to add home security installations along with other services we provide.”
This transaction is different from the other deals where cable/telco companies that have entered into the security space, according to Jeff Kessler, managing director at Imperial Capital.
“In our view, this is a good example of a telco/cable company looking at security as more than another incremental home services add-on where pricing is completely fungible,” Kessler stated in a research briefing.
However, Kessler notes that although DirecTV can market its services on the Web and other forms of mediums as much as it wants, unless the satellite TV provider offers reliable services to customers, the firm won’t be very successful.
Mercer recognizes that point, and says that DirecTV’s advantage will be offering LifeShield’s “innovative wireless product,” which features an expandable tablet-based system, as well as video monitoring on core packages, will set the company a part.
“The home security market is barely 20 per cent penetrated, with home automation at a mere 1 per cent,” Mercer says. “So there is a lot of room for growth. With the ability to leverage our brand and national footprint, coupled with an expert marketing organization and sales force, we believe we can make significant inroads in the market over time.”
