SiriusXM220

With an enabled fleet of 132 million cars but only 34.4 million paid subscribers, SiriusXM has long been frustrated by an inability to monetize the motorists it hasn’t been able to convert from free satellite radio trials to paid subscribers. Now the company is toying with the idea of launching an ad-supported satellite radio tier in the car. Seen as a way to monetize non-subscribers, it would make a limited number of channels available with commercials added into the mix. 

Jennifer Witz, who takes over as CEO Jan. 1, 2021, floated the idea Thursday during a presentation at Liberty’s investor day. Liberty owns a majority stake in the audio company. “You've heard us talk about never losing a listener,” Witz said. “The best way, the most successful way we can achieve growth here is by integrating the product in the car.”

The satcaster is looking at “a number of different options,” Witz explained, including how many and which types of its more than 350 channels to include. “Because what we don’t want to do is cannibalize the robust business model we have with subscriptions in the car,” Witz said. “However, with the combination of satellite and IP we can offer targeted and interactive advertising abilities and this can be a successful way to win back our non-converters and churners in a much more innovative way.”

The interactive advertising capabilities would be made possible by the ongoing rollout of its 360L next-gen, two-way radio receivers, which are expected to grow to more than half of the company’s enabled vehicle sales in the next few years. 

The move could be seen as a bit of, if you can’t beat’em, join-em. The company has long seen free over-the-air radio as its biggest competitor and Witz said AM/FM currently accounts for 70% of the $15 billion U.S. audio ad market. Outbound CEO Jim Meyer has repeatedly noted that when it loses a paid subscriber to “churn,” it typically goes to AM/FM radio. 

Four Key Priorities 

Witz also outlined four key priorities for the company moving forward. First is improving its penetration in the car with a goal of ultimately reaching 220 million enabled vehicles. The company has been signing long-term agreements with almost all of its automotive partners, many of which extend through 2028, and expects to get to 80% penetration of new car sales by the end of 2020. Priority No. 2 is getting more 360L receivers in cars. By next year 25% of new SiriusXM-equipped vehicles will include 360L, Witz said, before ramping up to 80% by 2025. 

The third priority is to improve engagement with satellite radio subscribers outside the car with online streaming, which is included in most of its subscription packages. “When trailers stream during the trial, our conversion rates are higher,” Witz said. Subscriber retention is also higher when subscribers stream the product. Growing digital-only subscriptions is the company’s fourth priority.

Witz, who worked with Meyer for 17 years at the company, provided a brief update on the status of Howard Stern. “I have nothing new to add today,” Witz said about contract renewal talks with the satcaster’s highest paid, best known air talent. “But we remain encouraged and confident that we’ll have something to say soon on this topic.” She added that the morning personality “is at the top of his game,” called him “incredibly talented and creative” and said the company “would be thrilled to continue to have him on our platforms going forward.”