Can Satellite Radio Survive?
from the a-long-way-to-profits dept
From the very early days of satellite radio, I admitted that I thought the idea was cool (from a geeky/techie standpoint), but I couldn’t see the business working out. I’ll admit that I’ve been surprised at how successful the two companies (mostly XM) have been in signing up subscribers. I really didn’t think that many people would be willing to pay extra to listen to radio. However, XM has done a great marketing job and it appears to be working. That doesn’t mean, however, that the companies will be successful. Even with the success stories concerning subscriber numbers, both companies are nowhere near making money. The loss numbers are pretty staggering. All that marketing cost a lot of money – and each individual subscriber doesn’t bring in that much revenue. They need a lot more subscribers, which will cost more in marketing dollars. Plus, as almost every consumer focused satellite business has discovered, satellites are expensive to build, launch and maintain. So, while I’ve been impressed, and will admit I was wrong about consumer interest in satellite radio, I’m still not convinced the current companies will survive. It may end up becoming like Iridium, where they’ll have to declare bankruptcy, and some other company will come along and pick up the pieces for pennies on the dollar – and then can try to make it work without the huge capital outlay of the original company.