A Deeper Look At The Samsung Deal
Sirius XM announced today at the annual shareholder meeting that they had cut a deal with Samsung to have the Sirius XM app on their televisions beginning this Fall. The news has several compelling elements that investors may not yet appreciate. This is the first time that Sirius XM has entered the television app market and more brands and devices will follow.
CLAIMING REAL ESTATE
The first benefit I would like to note is that Sirius XM has now staked a claim in the television app world. Previously this real estate was only occupied by Pandora, Last FM, and iHeart Radio. By getting an app on the Samsung platform Sirius XM will gain instant exposure where they used to have none. Why let Pandora rule the television when Sirius XM has a compelling service of their own? Simply being on the television makes users think about Sirius XM when they otherwise wouldn’t. This is a good thing.
ADDED VALUE
For existing subscribers, the benefit of having the Sirius XM app on the television is additional value. Most home entertainment systems contain perhaps the best stereo equipment in the house. In the past getting Sirius XM to stream through that stereo could be cumbersome. It required running an antenna to receive the satellite signal, and functionality often required pushing several buttons and sometimes even antenna adjustments to access satellite radio. Because the Sirius XM app makes accessing Sirius XM more user friendly, people that currently do not pay the $2.99 premium for Sirius XM Internet Radio may be compelled to do so. This could help the company boost ARPU through more sales of the Internet Radio package.
NEW SUBSCRIBERS
Fifty-five percent of the people who try satellite radio in their new car do not become self paying subscribers. There are any number of reasons this happens. One reason may be that they do not drive a lot and thus do not see value in subscribing. Now consider this type of person that sees the Sirius XM logo on an app on their television. This will inform the consumer that they can access this wonderful content even in their house. They may become more compelled to subscribe. The numbers may not be huge because Sirius XM does not get to market directly to consumers who buy televisions (Sirius XM does not have their contact info). However, any subscribers they do get should be considered bread and butter.
The bottom line is that this news has compelling elements that are not obvious at first blush. It sometimes takes a deeper look to see the forest through the trees.
Position – Long Sirius XM Radio
spencer , l love your thoughts about how siri can go ….johnny
Thank you for the kind words
Is it really a deal with Samsung? Building an app for a platform is not a “deal.” Is Samsung getting a cut? How much is this costing Sirius XM?
Also, you say “Previously this real estate was only occupied by Pandora, Last FM, and iHeart Radio.” but, what about slacker and the others? Its not like those are the only music apps on TV, there are plenty of others. It much worse than just those 3. The reality is, Sirius XM is last to the party again.
sxmfan…..
It is a deal with Samsung because they have an agreement to be a featured app shipped with the television. This does not happen without a deal.
My “previously” comment perhaps should have said “the likes of Pandora, etc.”
Yes, Sirius XM is late to this party
I have used the Sirius home kit with the outdoor antennae now for several years.
Even if I bought a Samsung with Sirius capability, I wouldn’t change.
For whatever reason, SiriusXM reception in bad weather comes through when cable or sat. tv. fail. a Winter ago, I went out to get the snow off the tv dish. The siri anntenae,which is attached to the same pole, had about 3 inches of snow on it, which had no effect on reception.
I also have a boom box that can operate on batteries which one can use when in power emergencys.
Samsung makes the best TVs now and with their internet enable slim 3D TVs they will leave everyone behind luckily SIRIUS Radio has an app. I agree it wont generate NetFlex time of subs but it is a new way to get more subs.
I think this is a positive incremental cash flow coming for the company. Good article.