With record high gas prices, and what is perceived by many to be a weak economy, consumers are holding off on spending, and even changing decisions about what types of cars they buy. Miles Per Gallon (MPG) is again a buzzword at auto dealerships. Consumers are seeking value.
For satellite radio sector watchers, the question is whether or not the mentality of value translates to satellite radio. Do consumers want more Tunes Per Mile (TPM)? Is satellite radio a luxury that people will do without, or is it a perceived as a value that people do not mind spending their hard earned and heavily taxed dollars on?
Even while the economy has slipped, conversion rates for satellite radio have remained stable. This would seem to indicate that in good times as well as bad, that about half of those exposed to the satellite radio concept decide to keep it. Because the statistics have not changed dramatically over the past year, it would seem that, at least for some, the cost of satellite radio is not so burdensome as to cancel a subscription.
So is getting more Tunes Per Mile worth the expense? Is getting content from news, to music, to comedy, to children's programming a value? In my opinion, the services offered by satellite radio do indeed represent a value, and perhaps, now more than ever, these companies should highlight that fact.
Satellite radio is currently hampered by the merger overhang, but that should not stop these companies from selling the value that they can add to the lives of consumers. Now is the time to sell the points of satellite radio that deliver value. Simple campaigns such as tunes per mile can go a long way towards getting consumers to better understand what satellite radio is, but more importantly, what satellite radio can do for the consumer.
People will debate as to whether SDARS is a luxury or not. There was a point in time when cable television was considered a luxury. In my mind the issue is not whether it is a luxury or not, but whether consumers see value in the service. If SDARS can sell their value, they will see subscriptions grow, and will be able to weather the current economy.
Thirteen bucks will physically get you 75 miles. Thirteen bucks can also get you unlimited audio entertainment and commercial free music for as many miles as you want to drive during the course of a month.
Position - Long Sirius, Long XM