Suddenly satellite radio is in a fierce fight with terrestrial radio for control of automakers’ and consumers’ attention. Question is, who can really win?
Satellite radio is apparently coming in loud and clear. SiriusXM Radio successfully raised its monthly fees and saw better-than-expected subscriber growth last quarter, adding more than 622,000 net subscribers. The company is apparently the king of the road as well — for now.
Currently two out of every three new cars sold in the United States come equipped with satellite radio, and many include a free trial subscription as well. With new car sales up in the U.S., SiriusXM is seeing an increase as well. Free trials are even being extended to some used vehicles too. “Nearly every automaker has a deal to provide satellite radio in certified pre-owned vehicles for three to six months now,” says Mark Boyadjis, senior analyst at IHS Automotive. The strategy is paying off. Industry forecasts suggest that SiriusXM should have around 23 million subscribers by the end of 2012.
And yet, the company’s rate of growth will likely be slower than in years past. Why? Growing competition from other technologies such as HD and Internet radio. The latter, which includes music streaming services such as Pandora, Clear Channel’s iHeartRadio, Tunein Radio, Spotify and Slacker Radio, are just as dominant on the desktop in the home and office as SiriusXM is in the car. (Satellite radio never really broke out of the automobile as then-separate Sirius or XM hoped prior to their 2008 merger.)
The question now is whether Internet can break into the dashboard? Yes, says Boyadjis. Anti-trust fears about the satellite radio=providers’ merger has given way to major competition, he adds. “A number of sources are battling for listeners,” he says. Not to mention the old standbys: AM, FM, and the Apple iPod.
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