NPD Group's July data shows satellite radio retail sales have risen slightly since June, but still fell 31% when compared year-over-year.
The Quick Glance:
- Sirius July 2007 Retail Sales:
Down 30% YoY - XM July 2007 Retail Sales:
Down 32% YoY
Marketshare:
- Sirius July '07 Retail Marketshare: 62%
- XM July '07 Retail Marketshare: 38%
As is par for the course at this point, XM continues to be the marketshare underdog when compared to Sirius' retail sales. And while industry sales were a modest increase from June (which was down 34% YoY), the trend continues of a slump in retail.
Here's my take. There's three main obstacles that consumers need to overcome when purchasing satellite radio in retail: Installation (very difficult for most consumers), Perceived Complexity (150+ channels is a benefit, but also a curse), and Value Proposition (especially when compared to iPods and terrestrial radio).
Of course, these obstacles also exist in the OEM side of things - minus the Installation problem. But the way the OEM side of the biz handles the Complexity and Value Proposition issues is by offering free trial periods. People experience the product, and realize that it's not complex and there's more value in the service than they expected.
If Sirius/XM apply the OEM model to Retail, they eliminate two of the three problems.
I totally agree; SatRad needs to apply the OEM way of thinking to retail as far as trial subscriptions go. I have family members who have thought about getting XM or Sirius, but are reluctant to do so because they don't want to pay for the equipment, activation, and a month of service without really knowing what they're getting. I think if you sold the equipment, gave free activation (often available online, but harder to get by phone with XM), and gave, say, 3 months of service, the retail side would do much better.
Installation could still be a problem, though my brother-in-law, who has never used an XM receiver as far as I know, had mine correctly installed in our new car in a matter of a couple hours. So, it is doable...And if you don't want to do it yourself, Best Buy or Circuit City are always happy to take your money and do it for you.
Iespecially think a trial sub and free activation on the retail side might make satellite radio a more attractive Christmas or birthday present for someone...That way, after three months, if they are dumb enough to not like SatRad and want to go back to terrestrial, the "gift" didn't cost them anything, and they can probably pass it along to another family member or sell it on Craigslist or eBay.
I think another problem at retail is people are waitng to see what happens with the merger. That is having a big effect for people who want sat rad but think they are throwing money away if the merger goes thru.
To their defense, last Holiday season they did push the "radio + 3 months" promotions for $99 as Xmas presents. But you bring up a good point about Best Buy and Circuit City... do you think BB and CC would push the products harder if a free trial sub was offered?
Retailers make a boatload from installation fees. Remove two of the three obstacles by offering a free trial, and retailers will push the radios that much harder.
And it works the other way as well. Once a device is professionally installed in someone's car, I GUARANTEE they're less likely to churn. No one wants a dock in their car that does nothing.
Hey ... wait... Why does no one see the forest from the trees?
With bigger and bigger OEM installs and more and more older cars comming off the road. The need for anyone who wants Sat Rad is waining in the retail side. On top of that the "Early Adoptors" are already here.
In addition XM has nearly double the cars out there with Sat rad installed over what Sirius has out there. Due to this XM naturally will have a lower retail share. However I do not discount that XM has seemingly given up on retail all together.