Today Sirius and XM announced their proposed tiered pricing that would take effect after the merger. The news was well distributed, and we thought it prudent to take a deeper look at exactly what is on the table.
While the press release discussed eight possible pricing options, two of them likely will not be available until one year after merger approval. This leaves us with six options, one of which is the existing subscription price. Of the six, two are higher than the current pricing and three are lower priced options.
Existing Service - $12.95
Sirius/XM Plus The “Best Of” the other respective service - $16.99
Family Friendly Plus “Best Of” the other respective service - $14.99
Family Friendly - $11.95
Mostly Music - $9.99
News Sports & Talk - $9.99
Now, realistically speaking, many subscribers will simply stay with exactly what they have today, and thus pay the same price. The question is how the other tiers will shake out.
Earlier today our sister site SATCOS posted a survey about what readers prefer to see. With about 64b votes in (not a large sample as yet), it seems many have an eagerness to try out the “Best Of” packages at $16.99. Totals as of this writing have 53% of the pool choosing the top tier of programming. Also very popular is the least expensive “A-la-Carte I” tier with 19% of the vote. We encourage readers to participate in the survey, as it will be interesting to see the results.
It is what it is. The standard package that we all know and love. No changes, same price of about 43 cents per day.
I see this as a popular choice amongst those that already subscribe. This is an upgrade that perhaps many have been seeking for quite some time. The price point is very reasonable, and more likely than not, the “Best Of” content will have a variety so as to appeal to as many as possible. Listeners may not like all ten channels in the best of, but seven may be appealing. Structured correctly, this option can be very appealing to existing subscribers. The popularity of this package with new subscribers in my opinion will be slightly less. People will simply pick the service that offers the most appeal to them.
FAMILY FRIENDLY WITH BEST OF
A very viable all-around solution. I do not want to sound sexist, but I can picture this choice being more popular with ladies. The added step of blocking channels goes away, and the parental review of the entire channel line-up will be minimized. More likely than not, the standard Family Plan will likely outsell this one by a decent margin, and in particular with new subscribers.
I see this as a very popular choice, and again, especially with female subscribers. The price point is slightly less than the standard service which will have an appeal, and people that feel strongly about not subsidizing what they consider indecent now have an alternative with a small savings to boot. This will also be a very popular switch for current subscribers. It will impact ARPU, but not in a tremendous way.
I see the “Mostly Music” package as a decent “sampler” of satellite radio. This tier may help minimize churn, and also get new subscribers to at least test the satellite radio waters. Some existing subscribers seeking value may switch down to this level, but I simply do not see it as the norm. I look for this to be a very popular package for new subscribers, as I feel there will be incentives to get people to at least try satellite radio.
NEWS SPORTS & TALK
I see the “News, Sports & Talk” as a choice, but not one that is widely adopted by a typical crowd. This option may be very popular for the crowd (a large crowd at that), that prefers to mix their own music on an I-Pod, but wants live news, talk, etc. to fill out their listening experience. However, at a price point of $9.99, why wouldn’t they simply opt for the standard package?
All of that being said, I think that the average subscription price considering all of these options will not see a lot of change. I personally feel that in point of fact that we may see a slight increase in the average revenue per subscriber, and in particular with the existing subscriber base. As time passes, and new subscribers try satellite radio, the entry level packages will carry a more prominent role, and the average revenues will level out.
I feel that Sirius and XM took steps to illustrate that the merger is consumer friendly, and I see the future A-La-Carte options as yet another step in that direction.
What are Your Opinions?
Position – Long Sirius, Long XM -IMOJB-