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.

Reader Comments (rss)

(Flattened / Threaded)

  1. identicon
    Permanent4, Mar 22nd, 2004 @ 12:08pm

    1xEvDO Radio?

    Y'know, Verizon Wireless is rolling out 1xEvDO wireless broadband Internet here pretty soon, and we'll see 1xEvDV within a year. Don't those technologies seem like better tools for distributing an alternative to FM radio than satellites?

    reply to this | link to this | view in thread ]

  2. identicon
    Matthew H. Wier, Mar 22nd, 2004 @ 12:21pm

    No Subject Given

    It's quite possible that Howard Stern will leave terrestrial radio and move to satellite. Were this to happen, I think we would see a big change in satellite radio's fortunes. Howard is in a pissing match with Clear Channel, which is a major stockholder in XM (the number one satellite radio company), so Howard would probably go to Sirius.

    reply to this | link to this | view in thread ]

  3. identicon
    Anonymous Coward, Mar 22nd, 2004 @ 2:10pm

    I Dunno...

    I also heard about Howard changing to digital radio. It makes sense for his brand of "entertainment" to be on the equivalent of cable TV, which doesn't have the same FCC restrictions.

    While the hard core fans would do it, I don't think Howard himself will drive enough people by himself to go out and spend $100+ (car) or a little less (home/office version) on equipment and then a monthly subscription fee just so they can hear him say the same thinks over and over again ("we got some NAKED ladies in the studio today - oh boy!"). Besides, you can catch his TV show on one of the cable stations.

    I looked at satellite radio when looking at a job that had a long commute, but decided against it when I found a job with a short commute. If you aren't stuck in a car a lot, how much radio do you really listen to? In addition, none of the models I found had LOCAL stations, so if you listen to any local talk shows (i.e. local politics or local sports talk) you lose them to get satellite talk shows, which would have a more national flavor.

    reply to this | link to this | view in thread ]

  4. identicon
    DASF, Mar 22nd, 2004 @ 5:29pm

    Who cares about live [radio] broadcasts?

    It seems like digital recorders like TiVo have shown that many people like time-shift their favorite shows.

    Why shouldn't it be the same for radio? I store my favorite radio programs onto my iPod for listening on my commute home. The MP3 streams offered by some radio stations are better than broadcast FM & Satellite. Plus I have full transport controls.

    reply to this | link to this | view in thread ]

  5. identicon
    Greg Spira, Mar 23rd, 2004 @ 9:05am

    No Subject Given

    I don't think Irridium is a reasonable comparison; That venture was a total disaster and never gained anywhere near the number of customers satellite radio already has. Yes, it's going to take a lot of investment before the company is profitable, but I remain firmly convinced taht satellite radio will succeed. I'm not sure there's room for 2 companies, though

    reply to this | link to this | view in thread ]

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