By Brandon Matthews
Now that Sirius XM has made the leap of faith by disclosing its true subscriber numbers by separating promotional subscribers from self paid subscribers, a little light can be shed on the company’s marketing plan.
To understand this concept, investors first need to completely abandon the idea of Sirius XM having nearly 19 million subscribers. They will get there, but they are not there yet. Sirius XM reported that they have 15,436,410 self paying subscribers. The other 3.1 million are in promotional periods which can expand and contract due to market conditions in the auto sector at any given time.
For years, I have been guilty of joining a chorus of negative sentiment when it comes to the apparent lack of marketing from Sirius XM. The newly discovered truth that there are over 3 million Sirius XM subscribers currently in promotional periods reveals the myth of this investor sentiment.
Non-music channels such as CNBC and others provide the company opportunities to advertise its own channel lineups, special programming and “best of” offerings to a captive audience that numbers in the millions of potential subscribers.
These promotional subscribers offer the company an exceptional marketing opportunity in that there is no hardware requirement’s above what is already in the car. This campaign can be utilized at the lowest possible cost, which is next to nothing when compared to other options such as network television.
The importance of the soon to be released Sirius iPhone & iPod applications comes into play here also as a way of increasing the retention rate of these promotional subscribers. As the unemployment rate remains high, it is likely that Sirius XM will need to add more value to its service to attract and keep a higher acceptance rate which has fallen from 50 – 44% in recent months.
None of this has been missed by Sirius XM and this marketing plan may very well have helped the company avoid many more promotional subscriber losses in the first quarter. Perhaps credit should be given, where credit is due.
Position: Long SIRI
Brandon,
Love it!! Great article best one yet!! I really want to become a BM fan but not there yet, more articles like this and u may win me over. Long 400K with 3,800 short calls (COVERED CALLS).
Credit is hard to come by these days — but I too will give Sirius XM their dues if the are smart enough to offer the millions of iPhone/iTouch users the chance to download their new app for FREE and enable them to experience the CONTENT difference through a FREE trial promo (7 day max). If the app is able to rank high in Apple’s "Featured" or "Top 25 Free" app listings and the 40-50% promo conversion rates apply — Mel and his marketing crew would receive a cr-app load of FREE advertising that could add hundreds of thousands self paying subs to their bottom line. Pandora currently ranks #23 on the Top 25 Free apps list. An app that outranks Pandora will attract the attention of tech savvy iPhone and iTouch users who will part with their discretionary incomes if the Sirius XM offering is deemed "cool as Apple." The best is yet to come!
Interesting article, Demian. I am wondering do we have any more detail on what is the bandwidth of the iphone interface? Could the phone software/hardware actually act as the converter of sat antenna signal? (like the stiletto e.g.) with the appropriate subscription of course. That would be good- even if it were not officially offered, could be done by third party like the starplyr used to be. Cheers.