Issue link: https://read.dmtmag.com/i/31501
28 SPECIAL REPORT www.securitysystemsnews.com APRIL 2011 SECURITY SYSTEMS NEWS BARNES ASSOCIATES/SSN STUDY RESULTS Wholesale monitoring study confirms RMR grew 8 percent during recession revenue figures. By Martha Entwistle YARMOUTH, Maine—The secu- rity alarm industry has a vaunt- ed history of recording revenue growth, year after year, through good times and bad. And then came 2009 and 2010. During the past two years, for Count on the first time in recorded alarm industry history, revenues were down. However, according to a new Barnes Associates/Security Systems News study, based on data from wholesale monitoring companies, there is good news among the not-so-good overall The study confirmed that the decline in revenues was isolated to revenues associated with sales and installation revenue, not RMR and related service revenues. What does this mean? It means that the not-so-good news—sales and installation revenue being down 18 percent from 2009- 2010—is tempered by good news: During those two recession-ridden years, RMR and related services was up by 8 percent, according to the new study. The two-year decline in sales when disaster strikes! Being “disaster ready” involves more than just fault tolerant equipment and backup systems. It also relies on people. However, local conditions can prevent dispatchers from getting to work to handle your alarms. Because we own and operate 3 strategically located hometown central stations (with a 4th scheduled to open in 2011), if local conditions affect one of our locations, we continue to deliver fast and professional service by overstaffi ng our other load-sharing centers. From a systems perspective, not all UL-listed central stations are created equally. In addition to our three mainframes running our monitoring software at our headquarters, we have two more redundant mainframes located in an off-site secure data center in Las Vegas, NV ─ giving your data, and your company, an added layer of protection that other central stations just don’t have. Isn’t it time you entrusted your business to the proven reliability of COPS? Monitoring America from New Jersey, Florida, Arizona, and soon... Tennessee and instal- lation revenues represents a “reset to 2005 lev- els” said Michael Barnes Michael Barnes, a partner in the consulting and advisory firm Barnes Associates, which spe- cializes in the security alarm industry and co-sponsors the Barnes Buchanan Conference. And yet industry sales still “involved enough new systems and RMR to offset attrition and increase the industry base,” he said. “That’s a strong comment on the resilience of the industry, the value of the services provided, and the stability of the recurring revenue, which represents the principal mechanism of value creation for owners and inves- tors, and the primary attractor of capital,” Barnes added. Barnes observed that most YOUR FOUNDATION FOR GROWTH: Yesterday. Today. Tomorrow. New Jersey | Florida | Arizona Toll Free: 800.367.2677 | Fax: 856.629.4043 | info@copsmonitoring.com | www.copsmonitoring.com CA: ACO6132 ▫ DE: 05-85 ▫ FL: EF20000481 ▫ IL: 127-001299 ▫ MD: 107-840 ▫ TN: 00000632 ▫ TX Burg: B11561 ▫ TX Fire ▫ ACR-2215 ▫ VA: 11-1941 industry studies rely on informa- tion from large players, or survey samples of smaller alarm compa- nies. “In either case the numbers are extrapolated from a small data set.” This has resulted in some conflicting revenue numbers, he said. “Particularly when surveying smaller alarm companies, there appeared to be some cloudiness around their reported segmenting of their revenues.” One industry report indicated that RMR and related service revenues were down by a large percentage for the industry over the last two years, which implied that “millions of alarm service sub- scribers vanished from the indus- try during the recession.” That report didn’t jibe with information from benchmarking programs, conversations with hundreds of alarm dealers of all sizes, and the published results of large players, which Barnes said, all pointed to “a high degree of stability in recur- ring revenues.” Attrition rates were up slightly, but sales still clearly generated enough new RMR to replace the attrition, even at the higher levels, he said. The Barnes Associates/Security Systems News study surveyed wholesale monitoring compa- nies in an effort to confirm what the Barnes’ anecdotal data sug- gested. Why survey wholesale monitor- ing companies? Barnes reasoned that the largest 100 alarm com- panies (which typically operate their own central stations) control about one half of the RMR in the U.S. The other half of the RMR in the U.S. is controlled by thousands of alarm companies, who typi- cally (90 percent) use wholesale monitoring companies to monitor