Monitronics Acquires Security, Home Automation Provider LiveWatch for Huge Multiples

Monitronics acquires LiveWatch for $67 million, proving spectacular valuation of hybrid DIY/pro security and home automation business models.

LiveWatch security/home automation system: build it yourself
Julie Jacobson · March 9, 2015

LiveWatch Security LLC, provider of security and home automation systems, just set all sorts of records by selling for $67 million – or 74x recurring monthly revenue (RMR) of some $900,000.

Monitronics, a giant central monitoring station and subsidiary of Ascent Capital Group acquired the firm, which currently serves approximately 32,000 accounts.

The acquisition was reported in Ascent’s latest earnings report for the year ended Dec. 31, 2014.

Typically, an excellent multiple – for a high volume of high-quality accounts – might run around 35x or 45x, so the 74x selling price of LiveWatch is rather spectacular.

What accounts for the unusually high purchase price? St. Marys, Kansas-based LiveWatch represents a growing trend in the business of security and home automation sales and installation: the model of self-installation and professional monitoring.

Customers order a system by phone or online. The provider configures and bundles up the products, and then ships them to the customer for DIY installation. Once installed, the customer activates their service which includes monitoring by a professional central station (like Monitronics), as well as interactive home automation services, in this case provided by

LiveWatch charges $19.95 per month for basic security monitoring via cellular (no land line needed). For $29.95 per month, customers also can monitor their alarm system remotely via smartphone. And then, for $39.95, LiveWatch offers modest home automation features, like the ability to control Z-Wave lights and door locks, as well as email and text alerts for alarm events.

Unlike typical security service providers, LiveWatch can do this on a national scale, all without dispatching armies of salespeople across the country, maintaining multiple offices, hiring and training installation technicians, maintaining fleets of trucks, and so on.

In other words, the cost of customer acquisition is pretty cheap.

Granted, like other security companies, LiveWatch practically gives away the hardware. The company offers two basic packages: $99 for an Interlogix Simon XT self-contained security system with two door sensors and one motion sensor; or a $199 Qolsys iQ self-contained security/home automation panel with touchscreen and built-in camera. There is a $19.95 activation fee for both. (Hurry, offer ends today!)

Keeping the Customers

Sounds like a pretty good deal, huh? Sending off a package and watching the RMR roll in?

Well, it’s not exactly that easy. ROI for security companies who subsidize hardware might run around three years, less for DIY-install companies like LiveWatch that have lower overhead.

So you have to keep the customers around for at least that long. It’s unclear just how well LiveWatch is doing in the attrition category. Good attrition rates in the home security business run in the high single digits … a little better for systems that also include home automation.

It appears that in its 13 years of operation, LiveWatch has served 200,000 accounts. (“Today, we have proudly served over 200,000 customers in the U.S. and Canada.”) But Ascent Capital Group (Monitronics) says the current number of monitored accounts is 32,000, which is not a terribly enviable customer-retention ratio.

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Monitronics is used to paying high premiums for monitored accounts. Two years ago Ascent paid 57x RMR to acquire Security Networks, a network of some 225 security dealers.

“The reason that we can justify it is because off that growth engine we are acquiring it’s going to drive that growth for us for many years to come,” said Ascent SVP John Orr back then.

Now, with LiveWatch, Ascent chairman and CEO Bill Fitzgerald noted in the earnings report, “This acquisition will allow Monitronics to diversify its service offerings with entry into the developing and complementary DIY home service category. In addition to bringing an additional 32,000 customer accounts to the Monitronics platform, it will also provide a very robust production engine that is expected to continue generating a high volume of new accounts and RMR.”

Despite all of the new self-monitored security systems on the market today, the percentage of U.S. households with professionally monitored systems has held fairly stable over the years at about 20 percent (chart below).

Ironically, the rash of new DIY products may bolster this rate, as the proliferation of users spurs false alarms at the very time that jurisdictions are cutting back on alarm responses and implementing “verified response” programs.

We cannot expect police to respond to every call from every user who gets a text alert that the front door has opened.

The Hybrid DIY/Pro Security Business Model

LiveWatch is just one of the many security and home automation businesses built on DIY installs with professional monitoring.

In 2013, DirecTV acquired LifeShield (security only, no home automation).

ProtectAmerica and Frontpoint are two other biggies in the business, both using Interlogix Simon XT panels and SHaaS (smart home as a service).

Link Home Security has a traditional home security business but also sells 2Gig security/home automation panels through Costco as DIY products with professional monitoring.

The principal of that business has told me that the attrition rate for DIY customers is dramatically smaller than those of the professionally installed systems because of the high level of engagement among the DIY users.

But just because they buy your products, DIYers still need prodding to actually install the products in the first place and to maintain the service for at least as many years as it takes for the dealer to recoup their subsidies.

As for Monitronics, Ascent reported Q4 2014 adjusted EBITDA for the three and 12 months ended Dec. 31, 2014, increased 3.4% and 18.7%, respectively. Monitronics’ RMR increased 3.1% to $44.1 million. The company’s average RMR per subscriber increased 1.8% to $41.64.

Latest Trend in Security & Home Automation: DIY Installed, Pro Monitored
DIY Security Systems Generate Recurring Revenue for Frontpoint
False Alarm Crackdowns: Why Professional Security Monitoring is Here to Stay

Parks Associates: Percentage of households with professionally monitored security systems holds steady.
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  About the Author

Julie Jacobson is founding editor of CE Pro, the leading media brand for the home-technology channel. She has covered the smart-home industry since 1994, long before there was much of an Internet, let alone an Internet of things. Currently she studies, speaks, writes and rabble-rouses in the areas of home automation, security, networked A/V, wellness-related technology, biophilic design, and the business of home technology. Julie majored in Economics at the University of Michigan, spent a year abroad at Cambridge University, and earned an MBA from the University of Texas at Austin. She is a recipient of the annual CTA TechHome Leadership Award, and a CEDIA Fellows honoree. A washed-up Ultimate Frisbee player, Julie currently resides in San Antonio, Texas and sometimes St. Paul, Minn. Follow on Twitter: @juliejacobson Email Julie at

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  Article Topics

Security · Business · Service & Recurring Revenue · News · · · Interlogix · LiveWatch · Monitronics · Qolsys · All Topics
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