Getting Sirius About Streaming

During first quarter of this year, XM, as a subsidiary of Sirius, lost close to a million subscribers (895,628), but added 700,000 new ones, for a net loss of 200,000 subs this year, according to a Marketwatch story yesterday. This, on top of subscriber declines at the end of last year as well.

sirius xmThis sheds some light on a story I heard from a friend last week. Someone stole his satellite radio from his car, so he called the company to have them shut it off, and while they’re at it, cancel his subscription, he wasn’t interested in buying a new one, and he’s not all that thrilled with the new channels since the Sirius XM merger. Not so fast, said the person on the other end of the phone, we’ll send you a new radio at no charge. My friend couldn’t believe his luck. Clearly, they’re in survival mode, and giving away radios that they can’t sell to retain paying customers is what they’re willing to do.

Satellite radio has relied heavily on new car sales to sell their product, now with the car industry in its own freefall, Sirius XM is doing everything it can to survive. They’ve begun to quietly market a streaming option to subscribers, and they are launching a new iPhone app, which will provide mobile streaming options to listeners. This, according to WSJ’s Sarah McBride, is a tacit concession “that the satellite-delivery system that once was cutting edge now has competition far beyond what its founders imagined.”

3 responses

  1. In other words….”It’s the content, stupid”. In radio, we have known this for decades but are easiily distracted by the shiny new technology of “space age satellites”! Sirius/XM’s move toward streaming makes sense as long as the content is worth listening to. At this point, with so many channels rehashing what is already available for free over the radio, or even online from programmer’s websites, they’ll need to develope something that someone wants to listen to. But wait, didn’t they just slash all of the overhead in the programming department to save costs?
    Uh oh.

  2. Erik Schwartz

    Streaming is not going to make a billion dollars in debt go away.

    XM does $200 million a month in subscription revenue. This is not a cash flow problem, it’s a debt problem.

  3. Nothing that Chapter 11 couldn’t fix. They burned through a quarter billion in cash every quarter at one point in time. The business plan never worked on paper, ever. Now, in today’s economy, it is even less viable. Once they clean up the balance sheet–if they ever do—use the pipeline for something worthwhile instead of commercial free music.

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