12.16.24 – SIW
Access control is integrating with video services to create a path to greater profits.
The smart lock space is dominated by a few large, diversified global companies; however, startups are putting pressure on the door lock giants to continue to innovate for smart homeowners.
While all smart lock providers offer similar core features of remote connectivity, unique codes for guests, and integration with key smart home platforms, new premium features, form factors, and services are being developed to differentiate from the competition and earn a premium price point.
Differentiation via Biometrics
Biometrics are established in today’s market as a premium feature. Many leading brands, including Schlage, Yale, Kwikset, and August, have at least one model offering fingerprint unlock. Several more now offer video-based unlocking using one of several facial recognition methods.
As of Q2 2024, Eufy and Lockly are early to market with locks featuring integrated facial recognition cameras, and Yale also offers European models with this functionality. In the U.S., Yale and August both offer facial recognition capabilities through smartphone face unlock.
More and more video device manufacturers are enabling facial recognition. Nest offers Familiar Face detection as part of its Nest Aware subscription that alerts users if unrecognized faces are detected. Smart home security provider Abode offers the Abode Edge camera that can distinguish between normal family activity and strangers on the premises.
Access Control and Video Integration: The Path to Greater Profits
In addition to its ability to drive higher hardware revenues, integrated video services can add a monthly recurring fee for smart lock OEMs.
On average, smart camera and video doorbell owners pay between $8 and $16 per month, depending on the service received (video storage, self-monitoring, professional monitoring, etc). With similar service options, lock brands can generate recurring revenue of more than $120/user annually. 71% of video doorbell owners paid a monthly fee for alerts, monitoring, or video storage in 2023, up from 62% the year prior. Service attach rates also rose for smart cameras, where 66% of owners report paying a monthly service fee, up from 51% in 2022.
Parks Associates estimates $13 billion in annual revenues for professional monitoring of residential security systems and video devices by 2025. Going forward, we project the strongest growth for professional monitoring of stand-alone devices like video doorbells and cameras. Service subscriptions also strengthen the relationship between the device manufacturer and the consumer.
Smart lock manufacturers may look to integrate with camera/video doorbell providers, but associated service revenues would accrue to the video platform provider. With an integrated camera, smart lock OEMs have the basis for a DIY security solution that could layer on professional monitoring services.
Professional security services typically retain ~85% of their subscribers year-over-year. Smart device owners with attached services give their devices higher Net Promoter Scores.
Most smart lock OEMs carry the cloud and support costs of the smart model over its lifetime, charging no additional fees for basic connected functionality today. Video opens a pathway to a recurring revenue model, and a driver for customer retention and brand loyalty at the next purchase.
This is an excerpt from the Parks Associates whitepaper, Video at the Door: Driving New Revenues, written in partnership with Xailient. Access it at www.parksassociates.com.
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About the Author
Jennifer Kent
Jennifer Kent is Vice President of Research for Parks Associates, a provider of market research and industry analysis regarding IoT residential products and consumer perceptions about these products and services. For more information about Parks Associates Research please visit www.parksassociates.com.