A-La-Carte Is Trendy
Lets face it. A-La-Carte is trendy. It is a move that companies are making in an effort to keep customers happy by delivering the things that customers want. For this reason alone, it is important that Sirius XM Radio should move as quickly as possible to bring A-La-Carte offerings to the table, and the satellite radio company could also learn a thing or two from the methodology Jet Blue has employed.
No more free headphones would typically be seen as a cost cutting move that takes away from the consumer. How does Jet Blue handle that? Simply by pointing out that they are “getting greener” by keeping thousands upon thousands of cheap headsets out of landfills. Customers can still purchase headphones for $1.
The latest offering of a blanket and pillow for $7 is sold as a responsible way to deal with hygiene issues, and there is perceived value because the blanket and pillow come with a $5.00 coupon to Bed Bath and Beyond. Thus, Jet Blue enjoys more revenue, gets an additional sponsor, and consumers don’t feel grossed out by their imagination that some greasy haired guy who hadn’t showered in three days was the last person to use the pillow.
Jet Blue has turned “A-La-Carte” pricing into an anticipated cash stream that is anticipated to add over $100 million to the revenue line this year. Can satellite radio make A-La-Carte a cash center. No, at least not yet. However, the day may come where a select group of channels that are commercial based are opened up for free to all satellite radio receivers as a advertising supported model that can get people to at least experience the concept.
Even something as simple as a sponsored A-La-Carte Radio where the consumer gets a promotion from a sponsor in the retail box may be a way to gain additional revenue. Some view A-La-Carte as a dilution of ARPU. Others see opportunity. The jury is still out, but Jet Blue is making money, and seeing an appreciation in their stock price on their A-La-Carte moves.
Jet Blue Story
Position – Long SIRI, No Position Jet Blue (but a frequent jetter)
Stock price has the Sirius Blues – I can wait
Several months ago I suggested to Sirius to provide several free stations with ads. That would mean millions of additional listeners that would be ad base income.
Question…how much ad revenue could Sirius generate if the service went free? Would it generate $4 billion or more? Would it be more than the $2.2 billion they get from subs?
SIRI should activate a small and free radio segment (paid by ads) that contains the government-mandated free public programming ASAP. I’m glad you mentioned it. I have been chomping at the bit to inquire about it. Free service will open access to new potential subscription paying customers. It will make satellite radios much more viable if they can be used without a subscription or with a small subscription or with a full subscription package with some a la carte programs added.
Hey Tyler & Brandon, Thanks for all the good work you guys are doing. Can you explain to me why there are all of a sudden new option strike prices available up to a strike price of $50 on SIRI? I am looking specificly at the Jan 09’s, but they are appearing at all strike dates. It even appears that many are being sold at very high strike prices (up to $30). Is this related to the shorts? Thanks.
there is no a la carte packages you where all mulled over by mel hahahahahaha
Tyler, this would be the perfect time for an on-line poll. List all the various programming options from the lowest cost to the interoperable elite programming option. I think the street would be surprised at how many current subscribers will opt to upgrade or at least continue their current plans.
Yeah, I agree – A limited offering of free ad-supported channels to extricate some ad revenue from all those deactivated satellite radio receivers. The ad revenue from 2-3 channels may not be much BUT it serves 2 useful objectives:
1)It’s a simple way to reach out to people who are simply an activation away from receiving the Best of Both.
2)Also, it would provide some empirical insight into how much ad-revenue is to be made.
When I approached the companies with this suggestion, they pointed out they generally frown upon giving content away – even if it’s supported by advertizing. That said, they have been considering such an approach from a purely promotional standpoint.
It’s only a matter of time before satellite radio appreciates that a substantial population (that continues to grow) will NEVER pay for radio, BUT will gladly listen to the uninterrupted feed of ad-supported satellite radio, even a limited offering, over ad-supported terrestrial radio.
What is the potential ad revenue if SAT radio were free? For sure it would put terrestrial radio out of business.
Tyler, though I agree with most of what you put out to press, I don’t really like the Jet Blue analogy. Airlines are desperate, to the point that they will lower themselves to charge for blankets. Christ, charge for the blanket and the earphones in my ticket price so I don’t have to shuffle around for wrinkled dollar bills.
A La Carte for Sirius XM provides the opportunity to bring on new customers, increasing subscriber count – not extort a captured audience.