It's official: Retail sales are in the toilet (December numbers are in) - Orbitcast

It's official: Retail sales are in the toilet (December numbers are in)

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Satellite Radio RetailThe ever-important Holiday Shopping Season didn't prove to do much for XM or Sirius last year, as NPD Group's December sales data shows a continued decline.

Combined data shows that satellite radio retail sales were down 37.5% for the month, when compared to December of last year. The sad part is that the comparisons were relatively easy.

The Quick Glance:

  • Sirius December 2007 Year-over-Year Retail Sales:
    Down 36%
  • XM December 2007 Year-over-Year Retail Sales:
    Down 41%

Marketshare:

  • Sirius Dec '07 Retail Marketshare: 68.3%
  • XM Dec '07 Retail Marketshare: 31.7%

That's a steep decline, especially when you consider that last year satellite radio retail sales were already down 46%. Looking at retail marketshare at this point is nearly pointless as it's simply a piece of an ever-shrinking pie.

Something needs to change in how we approach retail, because this obviously isn't working. And it needs to change now.

[SiriusBuzz]

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During the holiday rush of December, sales of satellite radio receivers for both XM and Sirius were down Read More

42 Comments

here's a dumb question I got Sirius for christmas before 1-9-06, the next year i purchased another sub and radio for my wife's car. How do you attract listeners like me to purchase more? I'm happy w/ the products and have no complaints the onl problem is I'm only going to be paying for my subs in 08. I understand the retail market is down for both XM and sirius but call me captain obvious the key is attracting new listeners. Myself and the other 10 million or so subscribers to bothe services are already sold on the product.

here's a dumb question I got Sirius for christmas before 1-9-06, the next year i purchased another sub and radio for my wife's car. How do you attract listeners like me to purchase more? I'm happy w/ the products and have no complaints the onl problem is I'm only going to be paying for my subs in 08. I understand the retail market is down for both XM and sirius but call me captain obvious the key is attracting new listeners. Myself and the other 10 million or so subscribers to bothe services are already sold on the product.

We still have most people not knowing much if anything about sat radio.
I know because i talk to people amd most know next to nothing about it.
What is needed is ads that show people what is on and how how it works were other radio does not. Also go after the kids that is something they have not done.

I would imagine the pending merger had something to do with poor sales.

If I were in the market to buy satellite radio, and actually looked into the details of how the pricing is going to be, I'd wait until there is a final decision to buy anything at all.

Because, if you wait until a merged company puts out new hardware, then you can go with the a'la cart programming and pick & choose ANY shows you want.

But if I understand this all correctly, those of us with XM and Sirius, we'll have to subscribe in chuks or blocks of shows.
For example, being an XM Sub now, I may want only NHL (XM) and NFL (Sirius), but I may HAVE to also get MLB (XM) and NBA (Sirius) too.

Another example. Let's say Howard & Bubba are on one tier and O&A & Ron & Fez are on another tier. I know this is like saying that unicorns are real, but bear with me, this is just an example. Let's say there's an O&A fan out there who also likes Bubba, they'd have to get the whole Howard/Bubba AND the O&A/R&F tiers if they bought now. If they wait until after the merger is approved or not, they could just get O&A and Bubba, and not get Howard or Ron & Fez.

Or maybe this is a better example. Maybe I'm a Sirius subscriber and I want Fox Sports Radio, but I don't want the XM Sports Nation channel, but in order to get Fox, I have to buy a Sports tier which includes Fox, XM Sports, etc.

So if I'm looking into buying satellite radio, why not wait to get the new stuff is out and be able to pick any and all the channels you want, and not have to get the ones you don't want.

With DoJ and FCC extending their review of the merger really stuck it to both XM & Sirius in Q4.

I would imagine the pending merger had something to do with poor sales.

If I were in the market to buy satellite radio, and actually looked into the details of how the pricing is going to be, I'd wait until there is a final decision to buy anything at all.

Because, if you wait until a merged company puts out new hardware, then you can go with the a'la cart programming and pick & choose ANY shows you want.

But if I understand this all correctly, those of us with XM and Sirius, we'll have to subscribe in chuks or blocks of shows.
For example, being an XM Sub now, I may want only NHL (XM) and NFL (Sirius), but I may HAVE to also get MLB (XM) and NBA (Sirius) too.

Another example. Let's say Howard & Bubba are on one tier and O&A & Ron & Fez are on another tier. I know this is like saying that unicorns are real, but bear with me, this is just an example. Let's say there's an O&A fan out there who also likes Bubba, they'd have to get the whole Howard/Bubba AND the O&A/R&F tiers if they bought now. If they wait until after the merger is approved or not, they could just get O&A and Bubba, and not get Howard or Ron & Fez.

Or maybe this is a better example. Maybe I'm a Sirius subscriber and I want Fox Sports Radio, but I don't want the XM Sports Nation channel, but in order to get Fox, I have to buy a Sports tier which includes Fox, XM Sports, etc.

So if I'm looking into buying satellite radio, why not wait to get the new stuff is out and be able to pick any and all the channels you want, and not have to get the ones you don't want.

With DoJ and FCC extending their review of the merger really stuck it to both XM & Sirius in Q4.

our Best Buy 'display' is non-existant and when it was there, all the wires were all over, the radios were broken, it was the worst looking section of the whole store. Retail doesn't care about SatRad anymore because SatRad doesn't care about retail.

1) Dear A. Nonymous author, have you considered OEM/Car Sales/Contracts were up 36%? Meaning you buy a car with a SatRadio installed? Both SatRAdioStations?
2) On top of that, those who bought a SatRadio 1 year, 2 years ago, will not buy a new one fom a store now or never?
3) Either his/her business vehicle is renewed and contains a SatRadio or
4) The new privately bought car contains a SatRadio already
5) The retailchannel becomes obsolete with growing OEM-ing, capisce?
6) 16 million or so subs, staggering 5% of the population, 30% of all vehicles?
7) Saturation?

i think the sub migration from retail to oem is happening quicker than anyone thought it would, which means the overall retail market for this product may be much smaller than previously thought. or consumers are waiting for the merger to happen before they make a decision. regardless, i think when the merger goes through, the a-la-carte plans may reinvigorate the retail market in the short-term. in the long run, they'll need to come up with some compelling new products or services that you can't get through oem in order to bring retail back to life. thoughts?

I wonder if anyone besides me remembers those DIRECTV infomercials on late night TV when they first got started. I remember seeing one, it was very detailed as to what the service had, what it costs, and what packages were available. That might be helpful for both services to do. And a bigger marketing budget would be a nice touch, too. :D

Yea ba ba booooey true but theres still a large market that needs to be targeted. It is good to see that the adapters of SAT RADIO are loyal. This proves that it is a product that sells itself. Also I think somone said it before...The merger is putting a strain on sales because people are waiting. I know many of my friends think once the merger goes through they will have both services and cheaper prices. BUT i think even if the merger goes through they will not reap the benefits right away. It will take several months if not a year to finally merge technology from what I understand. (Hope Im wrong)

But now with the car sales in all 08 car models, I know for a fact they will do good. Even those who feel SAT RADIO is just a gimick or pointless to pay for...down the line when everyone is driving around listening to radio on steroids they will give into the hype. Just like how ipods blew up. Also I think they still need to have talks with APPLE and aim for creating an accessory that allows users to pick up sat radio on ipod devices. That is a huge market and also proven loyal consumers.

I cannot get over the silly, misleading, prejudiced title of this article.

Nor can I understand why an author does not sign noff his/her article in person.

Maybe because it's full of bull?

How can anyone display a text like "Retail sales are in the toilet " ?

One must be a shitty, a.nonymous writer.

It is like observing: "...less and less people are using phone landlines...". WOW!

Some observation.

Do authors really get paid for these articles?

Isaac.

There is only one author at this site. You can now apologize to Ryan.

The answer to retail is simple and inevitable - Free radios with locked in subscriptions just like cellphones. You give away the razor to sell the blades.

There will always be premium radios, but eventually sat radio will have to go with the cellphone model of free devices as a good permanent part of their product offering. Its inevitable.

Sure wish the merger would be approved. For now, I'm just gonna sit back and watch my favorite tv shows.

Sure wish the merger would be approved. For now, I'm just gonna sit back and watch my favorite tv shows.

Sure wish the merger would be approved. For now, I'm just gonna sit back and watch my favorite tv shows.

Sure wish the merger would be approved. For now, I'm just gonna sit back and watch my favorite tv shows.

Both companies need to borrow a borrow a chapter or 2 from apple's book on how to drive retail demand. Where is the next big thing? I have had my Inno and Skyfi 2 for a couple years. There is literally nothing out there compelling enough to "Entice me" to replace either device.

Where are the cool devices with new features? I don't just mean more storage and bigger screens. How about maybe an Inno2/Stilletto3, that displays a baseball diamond, showing the players on base? Same with football. That would be sweet enough to pique my (and probably a lot of others') interest. Unlike mobile video, I can't imagine that type of capability would eat up much more bandwidth than PAD data does already. AND, it's something an Inno/Stiletto would absolutely kill at. An mp3 player simply can't do that easily (w/o wifi and web browser that is).

Looks like we can some anonymous SIRIUS retail/sales/marketing employees posting in reply to Ryan's article. I would be fearful of losing my job too with these numbers.

@Issac: That "anonymous author" would be me. While I'm a fan of satellite radio and of both companies, that fact won't prevent me from being critical of either of them.

I know all about the shift towards OEM as being a reason why retail is continuing to decline, but I also don't see it as an excuse.

There's plenty of opportunities for growth (PNDs for example), and neither company is going after them. Hence my disappointment.

the displays most certainl;y sucked

"There's plenty of opportunities for growth (PNDs for example), and neither company is going after them. Hence my disappointment. "

Ryan didn't XM already publicly state that in the future they are looking into integrating sat radio into GPS devices and cell phones. You think neither company will go after this market?

Sure wish the merger would be approved. For now, I'm just gonna sit back and watch my favorite tv shows.

You know Ryan, I just think you answered your own question about what needs to be done. You say personal navigation devices.

I think its pretty logical to assume that after the merger the combined company will look into integrating sat radio into PNDs since XM has already stated they plan to do this in the future.

All this gloom and doom has created quite a buying opportunity in these stocks. For crying out loud, we've known for over a year now that OEM is where the real growth is. Once the merger is approved you can expect exciting new products, including retail, and much, much more advertising. A La Carte, and "all sports' will re-ignite sub growth!

Buy the fear people! That's how the big money is made! Place your buy limit orders in stages from $2.25 to $2.55. And please don't place more than 20% of your portfolio here!

Good luck to all!

I signed on with XM at the start of July after a long debate on whether to go XM or Sirius - XM won because I'm a baseball fan above all. There's still a number of aspects I'm really interested in that's specific only to Sirius being a lifetime shortwave geek, i.e., BBC 1, the various CBC channels and the World Radio Network but having found an Inno for around $140 (not counting the two refunds that really sent the cost down around to $25) I'm pretty spoiled and have held out to find a Stiletto 100 somewhere for $100 post refund. Having not done so, I've been just about ready to take the jump for $150 or so but Best Buy hasn't had any in stock for over a month and no one there seems to know when or if they're coming back into stock. They can't seriously think that many of us will go for the more expensive $329 version - it just doesn't make sense to me financially (especially with the baseball season just around the corner). And yes, part of my hold out has been waiting for word on the merger so I didn't buy a second satelitte radio I'd only want to update a few months down the line. They might not be able to due to the review process, but Sirius and XM should be doing a better job of letting people know what's going on with the merger to perhaps push along a few more sales (like me, for instance!).

"Satellite Radio Facing Bankruptcy?"

"Satellite radio companies have been suffering heavy losses – and plunging stock prices – even as they continue to add subscribers. And a front-page story in Tuesday’s Wall Street Journal warns that the worst may be yet to come... Industry leader XM Satellite Radio Holdings Inc. lost $667 million last year, and rival Sirius Satellite Radio Inc. lost $863 million. The big losses have shaken investor confidence in the industry. XM shares have lost 71 percent of their value this year, and Sirius shares have lost 51 percent... For one thing, a substantial number of people who buy vehicles with pre-installed satellite radios don’t activate them, nor do many who receive a radio as a gift. It’s estimated that 10 percent of all store-bought radios given as gifts during the last holiday season were never activated. Also, those who do subscribe often abandon the service after a period of time, some switching to iPod adapters to provide music in their vehicle."

http://archive.newsmax.com/archives/ic/2006/8/15/175258.shtml

So its not just o and a who are failing. Looks like Howie's little doggy company is going to the toilet.


Theres always retirement I mean with millions in the bank why not?

I'm one of those who believe the primary reason one would purchase a retail satellite unit, is by word of mouth by those around him/her. By no means am I claiming this has always been the case. When Stern signed on, the postive reviews of early adopting peers was secondary to the Stern Effect. With the effects on sub growth attributable to Stern not nearly as heavy as they have been, postive feedback by peers is in my view the driver force in the demand for satellite radio.
With satrad listeners knowing the situation with the merger, informed peers are more likely to wait. It seems foolish to go out and get a unit now only to need a new one to recieve the full array options the merger entity may have. Great uncertainty in general.
So, its easy to see why the numbers weren't as they were in prior Q4s.
However, that is to not say I think the numbers would have been great without the merger ever being thought of. There are only so many people(myself included) that would install or have installed a plug-and-play unit. Thats a fact. Some people won't add "stuff" ever in their vehicle. The plug-and-play in car unit is something that, if the industry succeeds, will dissapear over time. Being standard in 90%+ of all OEMs.

I looked at Sat radio over Christmas and the best buy guy told me to hold off on buying until the merger was resolved... I can't be the only one waiting... combine that with the economy and these numbers aren't that surprising.

hoohoo I invented whatever people are fighting about

howard stern howard stern bobba booey bobba booey howard sterns penis

People who believe that the merger is the reason for the retail falloff are just exhibiting wishful thinking. Retail did not fall off after Stern was hired BECAUSE of Stern; rather, the Stern Effect masked the problem for Sirius during the same period.

Many of us who have been around for a long time were pleasantly surprised by the rate at which retail took hold in the first place. In retrospect, however, what should we have expected? The receivers weren't widely available in cars yet and there were some number of us who saw satellite radio as the solution for long drives searching for AM/FM stations that were 1/3 crap and 2/3 "Stairway to Heaven" and never having the "right" CD in the car with us. So, as a temporary measure, we stuck brick-sized receivers in our cars to just "get by".

Now, pretty much all cars have some option for sat radio. Those who HAD TO HAVE IT already got it. Most of the remainder will get it as they get new cars. The "Holy Grail" was ALWAYS going to be standard equipment installs.

There is no reason to expect retail to be a major contributor to satellite radio going forward. While both services had come to expect retail would be bigger than was, it is now gone and it isn't coming back -- at least not in significant numbers.

What about satellite radio enabled cellphones? It could really be a great thing for sat radio -- but neither service has yet to come up with a device that had power consumption levels anywhere near what you'd need. Even with batteries twice the size of that in a cell phone, you get only a few hours of battery life. People are not going to sacrifice their phone's battery life for a couple of hours of sat radio listening. Add to that the problem of poor reception, and no cell phone company in its right mind would touch it. Now, if XM's fine engineers can do something about power consumption and reception, you might have something. One wonders just how much wiggle room they have with current technologies.

Best to move on. Try to cram receivers in every new vehicle being built, take the hit on the revenue share, and eliminate the spending on branding/marketing. Over time, without a merger, it will settle out to a 60(XM)/40(SIRI) market share equilibrium and that will be that.

Meantime, the big spending for content HAS TO GO. Get rid of Stern. Eliminate NFL/NBA, scale back MLB. Oprah, NASCAR, and unfortunately Fox News Channel (which is the most important news channel for both services, but is also ridiculously expensive content). XM dumping Starbucks, Ellen and Tyra are all good, positive moves in the right direction. This crap was all aimed at getting retail subscribers, and if they're coming, the content expense has to go. If the merger happens, it seems clear to me that all this stuff is history as Mel starts cutting costs and trying to whip the merged company into shape. If the merge doesn't happen, XM and SIRI are clearly going to be engaged in heavy cost-cutting over the next several years.

Two words, "Saturation Point". Sat radio has a limited market in this day and age, Sales are slowing down because they're reaching that point where the people that want it have already have it. And now it looks like they're gonna have to compete with streaming radio to iPhones? I think the days of huge subscriber growth is in the past... but then again what do I know... I'm just a lowely smut peddler.... ;-)

>> Sat radio has a limited market in this day and age, Sales are slowing down because they're reaching that point where the people that want it have already have it.

This is at odds with the > 50% OEM conversion rate XM is experiencing.

Conversions are awesome and stuff, but ultimately meaningless if you don't factor in how many people are dropping subscriptions as well. Going on XM last earnings report for (roughly) every 3 people that subscribed 2 canceled. Yes that's still positive growth, the industry still has some growth ahead of it, but what I was getting at was that the days of crazy growth are over for the industry in my estimation (which is meaningless, it's just an opinion). They may be even further stifled if we start to see streaming to iPhones/iPods, and that looks like it will happen.

You make some good points in the first half of the post StackPointer, and more importantly, Ryan made some great points in a earlier posting about the difficulty and annoyance of plug-n-play type receivers.

I don't know about you, but in this day and age, if SDARS is not built-in to my vehicle, I don't want it. Too many wires, confusion, and terrible sound quality when playing it through an FM radio. It NEEDS to be integrated, which car manufacturers should have been doing from day 1.

XM and SIRI took far too long to partner and find a way to force the manufacturers to make it *STANDARD EQUIPMENT* in cars back in '02. Had they done so, then I believe they'd be far better off as companies today, and not have to worry so much about competition (i.e. iPods) being installed as plug-n-play competitive devices.

Yes, content too matters, but more importantly, getting the radios in cars for people to experience it should have been their top priority. Once people became hooked (they killed terrestrial just by having commercial-fee music nationwide alone), then they could have focused on additional content AFTER they had 20+ million subscribers and were the kings of integration. They simply did it backwards, paid too much for content to compete in the plug-n-play retail market, which wasn't their industry to begin with.

The reality of retail plug-n-play has set in in the last few years.

Hey, Issac...you're a no-nothing shithead. Learn something about the Satrad industry before you post your inane garbage here.

I know I'm holding off on buying new equipment until the merger business is done. I don't want to buy a new radio, only to find that it will be obsolete within a year. (Yeah, I know it will work, but when the newly merged company starts taking bandwidth away for new services, they'll start taking channels from me.) Then there is the waiting to see what channels get cut, and replaced with the the competitor's version. I'd rather wait to see how the channel lineup stacks up. I chose my satrad provider for a reason. If the merger screws that up. I'll go to one of those all you can download for a monthly fee services.

THE MERGER BUSINESS WILL NEVER BE DONE! If I was a pessimist, I would say the NAB couldn't afford to pay off the FCC and DOJ to rule against the merger, but they might have had just enough money to get them to delay it forever. How's that sound?

I was going to buy Sirious but then heard about a potential merger with XM a couple years ago as well as financial problems. So I decided to wait. It's been a while and I don't here anything. If you get Serious and then they merge with XM do you need to buy a new receiver and new subscription? Plus the technology is confusing. I think you need to install outside antennas and run wires through the house. And you need separate receivers for each vehicle. CD's are easier.

Poor management and marketing.

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