Satellite Radio subscribers grow to record levels - Orbitcast

Satellite Radio subscribers grow to record levels

| 6 Comments
Satellite Radio
Satellite radio subscriber additions are growing at a rapid pace, reaching a record-high of 19.5 million subscribers and causing Sirius XM Radio Inc. to more than double its 2010 subscriber forecast.
"Our subscriber results mark the best quarter of gross additions, deactivations and net additions since the merger of Sirius and XM in July 2008," said CEO Mel Karmazin.

In the first half of this year, Sirius XM added 754,690 net subscribers and ended Q2 with a record-high of 19,527,448 subscribers. Compare that to a loss of 590,421 net subscribers in the first half of 2009.

But TheStreet.com points out that while the growth is significant, it's "half speed" of the pre-merger rate of 1.2 million net subscriber additions in the first half of 2008. Interestingly enough, TheStreet does not point out that this pre-merger growth was during better economic times.

The company also has increased its subscriber guidance for the third time this year and now expects net additions of approximately 1,100,000 in 2010 - that's up from May's projection of 750.000 subscribers.

Self-pay churn fell to 1.8% - an improvement from 2% for the second quarter of 2009. Meanwhile the conversion rate from vehicle trial subscriptions to a self-pay subscription grew to 46.7%, an improvement from 44.3% for the same period last year.

6 Comments

Can ya all say EL FUDGE-O ?

One point some may find of interest is that the "churn" (cancellation) figure is 1.8 percent per month, not per quarter. So, if you think, as Karmazin is quoted, that these figures "reflect the attractiveness of satellite radio," then what does he make of the fact that, in the first place, fewer than half of new car buyers who get free subscriptions ever elect to pay for this service, and, of those who do, more than one of every five says goodbye every year? To me, it says that these figures are almost exclusively the result of stronger car sales and the free subscriptions handed out with said purchases, and that when customers have to pay for this service they tire of it rather quickly.

Perhaps it's time to look at holding on to paying customers by giving them better deals for multiple radios and not axing the channels they signed up to get, rather than depending on a constant influx of new customers coming through the door, because in the near future the pool of people who don't say "been there, done that" about satellite radio will dwindle to practically nothing.

Good points as always, XC...sounds like Mel is putting a positive spin on the churn rate.

I think a lot of the problem that still exists for introducing people to satellite radio (even the car buyers) is that a lot of the public still does not know what satrad IS...there needs to be much better introduction and education of the public as to what is on satrad, and what makes it attractive as well as compelling.

A lot of that comes down to the people on the ground: the employees of the car dealerships, the electronics stores and the like. I believe one of Mel's cuts was to those street teams, who made sure that the workers of these places knew all about satrad, what it is, how it works, and what's on it.

Even in the state that satrad is right now, program-wise, it can still be a vital thing that people would be willing to spring for.

The better deals for additional radios and services is a great idea; that will make it worth the public to have radios in their car, the house, etc.

I would like to see a better focus on getting the message out, and that is the base message of satrad's capabilities.

Once again I get home from work to find my Sirius Radio tuned to Acquiring signal, as it is for 6-8 daily. Excuse me, am I paying for this? I must have missed the portion of the literature that said my signal would come and go like the wind. I don't get AM/FM where I live. I thought satellite was the solution. Foolish me. My antenna has'nt moved in 3 years. Guess the satellite's orbit is decaying. Is there a meter that stops running when I do not recieve a service I'm paying for?

Dumb question,but who is that in the picture,with the guitar?

Anonymous: I would suggest using the "antenna aiming" function of your radio (usually in the menu somewhere) and relocating your antenna. In a fixed location, receiving satellite radio should really not be a big issue if the antenna is well positioned. Also, I have always heard that XM works better for listeners in a fixed location (as opposed to a moving vehicle) than Sirius because the Sirius satellites move relative to your ground position, while the XM satellites are "geostationary." I can get XM in my house even without putting the antenna near a window.

Black Dog: Thanks for the comments. I think your point about needing to educate people about satellite radio is good, but if a person buys a satellite radio-capable vehicle, doesn't the dealership activate the free trial service for them? I've always heard that to be the case with new cars, anyway, and when you test drive a new car, the satellite radio is generally already activated, if it's so equipped.

Despite getting free initial subscriptions, fewer than half of buyers of satellite radio-equipped cars convert to paying subscribers. Clearly, some people just aren't in the target market -- either they don't drive that much, they don't listen to the radio often, they prefer their own music via CDs/MP3s, just don't want another bill to pay, or whatever. People who've had free access to the service for a period of time and elect not to purchase it are probably a lost cause, so wouldn't it make sense to look at the people who DO demonstrate that they will pay for satellite radio, consider their tastes and preferences, and design a somewhat more sophisticated product that people grow into? What they seem to have now, on the contrary, is a product people grow out of, with over 20 percent of paying customers calling it quits every year.

Having said that, I don't necessarily disagree with your comment that better marketing and consumer education could make satellite radio at least somewhat more successful than it is now. I've never heard of anyone being offered a long-term subscription at the time they buy a vehicle, for instance, but that would be the ideal time to sell subscriptions for three years or even longer. People could finance the long-term satellite radio subscription right in with the price of the car and then never have to worry about a bill or a recurring credit card charge. Selling retail radios with a "packaged" one year or longer subscription included in the radio's price would also make the service more accessible to young people and others who do not have access to credit cards.