How’s Sirius XM Planning To Grow Its Subscriber Base?

by Trefis Team
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SIRI
Sirius XM Radio
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Sirius XM holds about 30% share  of the U.S. paying subscriber market, with close to 30 million subscribers. It could seem to some that growing subscribers from this point will be hard for the company given that its penetration in the new car market has stabilized and Spotify is still growing rapidly. Even Pandora, with its new on-demand subscription service, is looking to nibble its way into the paid subscriber market. That said, despite these challenges, we believe that Sirius XM can continue to grow its subscriber base by leveraging its foray into both the used car domain and connected car services. We expect the company’s subscriber base to increase from 30 million currently to over 40 million in the next six to seven years.

Expansion in the Used Car Market

Sirius XM’s penetration in the used car market is at 29% currently, compared to 74% in the new car domain. The used car market is attractive for Sirius XM and penetration could grow from current levels.  This presents a strong opportunity for Sirius XM to additional growth from the used car market. The company’s management has stated that there were about 82 million satellite enabled vehicles in the country in 2015, a figure that is surely higher now. We expect this number to grow to 120 million in five years and 150 million in 10 years. CFO David Frear expects used car trials to surpass new car trials in the foreseeable future and double in the next decade. These numbers suggest that the company is extremely confident about potential growth in the used car market, and it could play a key role in driving subscriber growth going forward.

Connected Services

Apart from offering listening content through satellite radio sets factory-installed in cars, Sirius XM also offers connected services to car manufactures through its subsidiary – Sirius XM Connected Vehicle Services Inc. The company provides an array of features to enhance safety, security and convenience. These include remote and assist services, automatic crash notifications, easy access to maps, weather, restaurants and points of interests, scheduling service appointments, repairs etc. Currently, Sirius XM provides connected services to Acura, BMW, Hyundai, Honda, Infiniti, Jaguar, Land Rover, Lexus, Nissan, Subaru and Toyota. With new car sales increasing steadily, connected services should provide buyers an incentive to subscribe to Sirius XM services, which should keep its growth running.

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Notes:

1) The purpose of these analyses is to help readers focus on a few important things. We hope such lean communication sparks thinking, and encourages readers to comment and ask questions on the comment section, or email content@trefis.com
2) Figures mentioned are approximate values to help our readers remember the key concepts more intuitively. For precise figures, please refer to our complete analysis for Sirius XM
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