Entertainment services are playing a key role in expanding the smart home market, with home automation expected to grow in the coming years, Juniper Research has found.Juniper forecasts that consumer spending on smart home services, including entertainment, health, energy and home automation, will reach US$100 billion by 2020, more than double this year’s estimated spending of US$43 billion.
Entertainment services such as Netflix and Spotify are currently playing a key role in boosting market size due to universal appeal and their low cost, however the make-up of services is expected to change in the coming years.
Home automation is forecast to be a growth area, with the segment expected to grow on the back of falling hardware costs and increased consumer awareness.
With home automation services having struggled to address the mass market, Juniper has found that incremental unit-by-unit purchases represent consumers’ most likely point of entry into the market. Despite this, Juniper noted vendors such as SmartThings and Nest have successfully added subscription services to their hardware sales, generating “lifetime value”.
“Enabling services to generate recurring revenue on top of smart home hardware will be crucial for realising the projected long-term success of this market,” research author Steffen Sorrell commented.
“However, tapping the developer community to innovate and address the wider market remains an issue.”
Meanwhile, the report additionally forecasts that the number connected appliances in smart homes will total over 20 million by 2020, with the market to continue to be characterised by high prices and a low value in connectivity.
“Consequently, while Samsung expects 100 per cent of its portfolio to be connectable by 2020, consumers actually using these features is forecast to remain relatively low,” Juniper notes.
Voice control and other hands-free mechanisms will become the principal methods for smart home control, Juniper additionally found, with the use of wearable devices to passively supply “quantified self” data to control smart home devices likely to emerge as a key use case towards 2020.
