Sirius XM Delivering More Content Via Mobile Apps Will Boost Revenue
The Consumer electronics show is around the corner, as are announcements regarding Satellite Radio 2.0, December auto sales, and perhaps even a subscriber announcement tallying up the totals for 2010. The real news however is an additional revenue story that is unfolding and almost unnoticed by many.
Sirius XM Radio recently negotiated successful deals with the National Football League, Howard Stern, and now Manchester United. One key aspect of each of these deals is that they all included rights for Sirius XM to broadcast the content over mobile apps. While on its face it may not seem like a big deal, in reality it is huge. Mobile apps are becoming, more and more, a mainstream method for people to get their audio entertainment.
Take a typical resident of New York City. The average person does not even bother with a car, instead relying on public transportation. Sirius XM has portable devices, but realistically people do not want to carry around an iPod, a cell phone and a portable satellite radio receiver. Most would rather get everything into one device if possible, which is what makes iPhones, Droids, and Blackberry’s so popular.
Internet streaming comes as a premium service with Sirius XM. This means, if you want the ability to stream Sirius XM content over the web you must pay a $2.99 premium over the base rates. Up until now, some people may not have had a reason to pay the extra fee.
The addition of Stern, the NFL, and Manchester United to the app roster gives the service more consumer value, and thus, by extension, will mean new revenue dollars for Sirius XM. People love this type of content and Sirius XM can deliver it via satellite or the Internet, and advantage that we should always remember.
While $3.00 per month may seem slim, consider if 3 million additional people decided to opt in. That would represent $9 million per month in additional revenue. Still not impressed? Do the math and you will see that a simple $3.00 per month fee can easily become over $100 million per year!
The beauty is that Sirius XM does not need a price review from the FCC to do this. Internet streaming was separated out during the merger process, and thus this added revenue stream avoids the government scrutiny that the base charges are going through now.
Should the company be allowed to increase base prices in 2011, the revenue could jump higher yet again. This added revenue should pan out over the next two quarters. Look for ARPU (average revenue per user) to take a nice jump when Sirius XM announces their financial data in February. The company is already promoting the availability of Howard Stern’s app availability on the main website.
Combine growing car sales with better structured content deals and it is little wonder that we have been seeing the types of upward equity moves that make investors sleep well at night. All Sirius XM needs to do is remain focused, demonstrate effective cost control, and 2011 should be a great foundation for satellite radio going forward.
Position – Long Sirius XM Radio
The idea that the FCC still has any say in whether SiriusXM can raise their prices should be challenged in court. A voluntary agreement was made by siri to freeze prices for 3 years. That should be the end of it!
Satellite radio is as discretionary as a consumer product can get and the government has absolutely no business meddling in the discretionary consumer market—-period!
The government’s track record of meddling in the markets ranges from pathetic to tragic.
Sirius XM agreed to a price freeze as well as an FCC review on pricing. They agreed to it, and that is what we all have to deal with now
Spencer, for how long is SiriusXM subject to pricing review?
Spencer I see you decided to put a more friendly picture of yourself.
Not so mean as previous ones -lol
LOL….I am about the friendliest person you would ever meet.
Nice Article Spencer. This pic is better than previous pics….for real. have you thought about advertising for Sirius XM Radio? You can have two radios in those hands and with a smile like that we can get more subscribers.
thank you for the kind words on the article…If I thought my smile would help get subs I would offer it up….lol
I think you have missed an even bigger part of the puzzle. What about all the smart phone toting Brits, and Americans spread across the globe? Canadians? What about the new spanish channels? These are people that have had NO access to SIRI. Now they have worldwide access, and growing reasons to pay for this service. Sirius will soon launch an internet ONLY service, and it won’t be for $3 a month. This will be even bigger than you anticipate…..
I have felt for a long time that Sirius was the radio version of ESPN. Everyone wins. Sirius has the ears so they can pay the most for content. People will pay a premium for the content. The cirle of profit. The content suppliers will support price increases for obvious reasons. Customers will complain but in the end the don’t have to have the product its a choice.
Yeah Spence, you look younger and smarter. Good observations on NYC subs and mobile apps. Similar, I think, to have one year subscriptions on a new car purchase. Who wants to have another bill coming in after buying a new car, in just a few months. It’s probably just about equally irritating between having something I have to remember to pay as it is the amount. So please, give me a least one year of Sirius/XM, when I buy a car. Or at least give me options. Roll 1-3 years into my financing and I can forget about it. Like they do with all of the other options I choose when I buy a car. “It only adds a few dollars a month.”
With all this spending and profits on apps with soccer and NFL..will MLB finally be coming to the best of XM before opening day 2011??
I don’t think MLB will allow for the games to Sirius subscribers under the current contract, so unless they can renegotiate a new clause to allow then we have to wait for contract to expire.