The cable industry is getting more excited about the smart home, but they still have to justify managed services to the mainstream. The classic do-it-yourself market is getting crowded.
This week, I moderated a panel that included folks from Comcast, Time Warner, Cox, MediaCom and Suddenlink Communications. I had been looking forward to this panel, because there’s lots of excitement over smart home services, and with good reason: Time Warner just announced its best quarter ever with 13,000 new adds, iControl keeps adding new partners, and AT&T has been dumping tons of money into advertising its Digital Life offering.
So what’s different today from a decade ago when cable and telcos first started offering security services?
- The technology has matured. The arrival of platforms like iControl to manage security and smart home services from the cloud have lowered the cost of support and given cable companies a turnkey way to weave smart home services into their existing install and management infrastructure.
- Perhaps more important, consumers seem to want these services, in part because they now have mobile devices like iPhones and iPads that can act as a universal control point.
But even so, smart home services are still just a rounding error for big cable, dwarfed by their core video, broadband and telephony triple play services. Time Warner’s smart home subscriber count stands at are at 57,000 after nearly two years of rolling out the offering. And this is likely bigger than everyone else in the cable space outside of Comcast’s Xfinity Home.
The biggest incumbent in the security market, ADT, has done better. ADT currently has over half a million customers for ADT Pulse, its smart home offering powered by iControl. But the cable gang is trying to do more than just eat into the existing 20-25% market share of incumbent home security providers.
As Adam Mayer, the VP and General Manager of Time Warner Cable’s Intelligent Home division put it, “if all we do is just take away ADT subscribers, we’ve lost.”
Justifying service fees
With all the different options today, from DIY smart home startups and well known home networking players like Belkin with its WeMo platform, to home improvement stores like Lowe’s with Iris, you have to wonder if cable can entice customers. Particularly when it involves a monthly service fee of $30 to $40.
According to Kristine Faulkner, VP and GM for Cox’s Home Security & Smart Home division, those DIY offerings could act as the consumer’s first taste of smart home offerings, and from their they can eventually move up into a managed solution from a service provider. In other words, DIY can be a gateway drug for the more robust smart home offerings from service providers.
Others on the panel echoed Faulkner, and I think they could be right. The challenge is convincing consumers that they need an Internet of Things “manager” that goes beyond the tangible benefits of monitored home security, the “tip of the spear” so far for service providers signing up consumers for their offerings.
In the end, the battle will not be so different from the OTT vs. paid TV battle we’ve watched unfold over the past decade. DIY, like over-the-top video, has appeal because it’s lower cost and some consumers simply like to be unencumbered by subscriptions, especially from cable companies. The trick for any service provider will be, in the end, proving that they provide the value that justifies a managed – and more expensive – smart home.