XM Satellite Radio’s vision is to provide audio entertainment throughout the continental United States using a satellite-based digital radio broadcast system. Robert Acker, director of strategic planning, must raise the necessary $1 billion in up-front capital before the company can launch its services. To attract sufficient fund from the potential investors, XM needs to provide a realistic plan with high enough return. It requires reliable estimates of total market size, speed of adoption, and the selection of revenue model, for XM during the discussions with investment bankers, radio manufactures, radio chipset makers and satellite companies. Introduction
After several years growth of satellite television and cable TV, XM Satellite Radio, which was founded in 1992 as subsidiary of American Mobile Satellite Corporation that had recently partnered with WorldSpace Corporation, planned to serve as an audio entertainment company and broadcast 50 or more satellite radio channels featuring high CD quality sound. In order to raise enough finance to ensure the project will launch successfully, Acker had to develop a sound business model in a limit time framesince Sirius who was the major competitor in satellite radio market had gone public and presented it subscription-based model to Wall Street.However, as the only competitor in the existing satellite radio industry of continental US, Sirius had been already a head start on XM both in terms of financing and technology. Key Issues
To convince the potential investors to have faith in the success of XM satellite radio service, XM first had to make decision on its business model, including the differentiation strategyfrom its competitors. Second, it had to find out an appropriate approach to radio manufacturers. At last, an effective marketing plan to implement for the system launch needs be to designed and evaluated. Marketing Analysis
Place - Radio manufactures entered the broadcasting arena in order to ensure that broadcasts went over the air and to keep the demand for their radios high
PriceFee-based service with commercial-free feature could represent a clear point of differences between satellite radio and terrestrial radio. Promotion
* We have a $100 million budget to plan XM communication strategy * No information about Sirius strategy
CompanyAfter several years growth of satellite television and cable TV, XM Satellite Radio, which was founded in 1992 as subsidiary of American Mobile Satellite Corporation that had recently partnered with WorldSpace Corporation, planned to serve as an audio entertainment company and broadcast 50 or more satellite radio channels featuring high CD quality sound. Collaborators Worldspace provided much-needed technical expertise in the design and deployment of the satellite service, and XM received final authorization with FCC license to launch and operate for the purpose to provide satellite radio service.To attract enough investment is crucial for XM to launch its service successfully. Not only rely on a single manufacturer, XM planned to build partnership with several major radio and chipset manufacturers, also agreement with aftermarket companies and strategic relationships with radio receiver manufacturers for future production distribution.Content and program providers and channels to get advertising are also concerned in XM’s business model. CustomersThe cumulative projected demand is attractive both in home radio and mobile radio including car listeners and portable devices. The reasonable subscription is highly demanded in the age group 18-34 for both genders and also the people who are interested in new technology.See Appendix CompetitorsThe only direct competitor to XM in the satellite radio industry is Sirius, who carries its business model of $10 monthly subscription fee for 50 channels of commercial-free radio with digital quality sound, and focuses on...