Hear 2.0 got ahold of an insider who spilled the beans on the initiatives behind a merged XM-Sirius.
I have a few issues with this "mole" and the information being "leaked" - primarily that each bit of info is surrounded by snarky commentary which raises an eyebrow as to any ulterior motives - so go ahead and read the post first and then come back here for my take.
...you back? Sure you are. So let's pick this apart shall we?
First, the whistle-blower says that the "pricing itself will resemble the tiered approach that cable exploits so well ... It's simple - lower subscriber fees will come with less programming choices attached." -- is this a revelation? How else are tiered subscription packages offered?
The entry level tier will consist of a "basic and limited representation of satellite radio programming: news, talk, music, and some public service" with "probably no high profile programming" like MLB, NFL, etc. This premium content will be attached to a... wait for it... a premium tier. Yet another brilliant revelation by this mole.
(Recap: So far we've learned that a basic tier will be offered, with a limited selection of programming. And a premium tier might be offered with premium programming. I hope you're still in your seat at this point.)
In all fairness, it does get somewhat interesting from this point forward:
"What's also been lost is the fact that once an aspect of the service goes to a premium teir, eventually payments to that service provider also rise."
This seems obvious as well, but not something that has been talked about much. Content providers that have a rev-share deal in their contract will see an increase in money owed to them because they're in a "premium" tier. The writer goes on to challenge the notion that subs will pay premium rates for premium content -- which seems contracting to his previous statement. Either way, premium content providers will be asking for more money, regardless of what the NY Post seems to think.
Then the mole goes on to talk about the music channels. "XM has 69 commercial-free channels. Sirius has 69. Does that mean a merged company will have 138 music channels? Of course not. A combined company would need only 70-75 music channels to cover most of the audience's appetites. And even if you plead that a merger should create more choices and end up adding another 25 channels you'd have to tack on a big number to cover the rights fees."
This obviously was my biggest fear regarding the merger. In an attempt to keep those royalty fees in check, those music channels would have to be limited. We all know that DJs don't make that much coin, but those royalty fees will be the focus of the number crunchers.
...and now the clincher. You ready for this?
"Assuming each music channel averages 40kb bandwidth, the approximate net gain from the channel consolidation is 1520kb of bandwidth. Most of that would go toward premium services. So what's the true killer app for premium services? Video, of course. Once satellite radio starts pumping video into the backseat of OEM vehicles, the real gravy will start to flow. Their automotive partners already know this is the new frontier. Satellite radio will need to come along if they plan to be part of the brave new dashboard because OEM is the future of satellite radio."
This, I have a problem with. First, the thought that bandwidth would suddenly be opened up as a result of this merger is not realistic - at least not for the short term. The 1+1=2 concept doesn't work. And I have a problem in thinking that a mole who is so "informed" would see the bandwidth benefit as such a simplistic equation. Both networks will continue to operate independent to each other for the next decade or so, and while some of the newer satellites have cross-network capabilities, these would initially be done at the chipset level. The legacy receivers would continue to be supported, meaning that XM content would essentially be simulcast to Sirius receivers, and Sirius would simulcast content to XM receivers. Can you say bandwidth hog?
So fine, the Backseat TV receivers would have the cross-network chipsets built-in, allowing for better bandwidth. Great. But I have a problem thinking that Backseat TV is the savior of satellite radio. Is Backseat Video really the roadmap for success that a combined XM-Sirius have in store? Please. I don't think XM-Sirius even have a concrete plan themselves (they still need to get the deal approved, oh and there's that little anti-trust/collusion thing), so how this informant knows the next "killer app" is beyond me. Sounds like another over-zealous fan-boy who's looking to be Internet-famous.
No, I'm calling Bravo Sierra on this "mole" and demand that he be tarred and feathered for "leaking" information that we pretty much already know. Sorry buddy, you've been called.
[Hear 2.0]
Pioneer has been slowly snuggling up to both XM and Sirius recently. So it doesn't come as not much of a surprise that rumor has it that they're developing their own wearable receiver just for Sirius.
