Fm Radio - Analysis

Topics: Sirius Satellite Radio, Satellite radio, XM Satellite Radio Pages: 6 (1722 words) Published: July 11, 2007
1)XM Overview
a.Financial overview
c.Products and services
d.Strategic alliances
e.Current crisis:
2)Market Analysis:
a.Market share
b.Market size and trend
c.Target customers and Segmentation
d.Future and forecast
e.International market growth opportunities
3)Distribution channels Analysis:
The most useful segmentation of the satellite radio market is by the channel through which the subscriptions are obtained. Net subscriber additions refers to the total number of subscriptions acquired in a given period of time and deducts all non-renewed subscriptions—including expired promotional subscriptions that were not converted to normal subscriptions. XM segments it market through three channels. i)Distribution through OEM: Satellite radio subscriptions that come in through the OEM auto maker channel are frequently attached to a promotional period in which XM or Sirius receives approximately half of the subscription revenue as it would with a non-promotional subscription. Depending on the satellite radio providers' role in the promotion, the revenue amount received for a promotional subscription may be higher or lower. The OEM promotional periods typically range from three months to a year and are paid for, in part, by partner manufacturers. Consumers who obtain their satellite radio with the purchase of a new—or recently manufactured—car simply activate their service through one of the broadcast providers. These radios are specially designed for individual car models. In a new car, the satellite radio is an original equipment manufacturer (OEM) component that is either pre-installed in all of the models or is an optional upgrade. In an increasing number of models, the radios are AM/FM/SAT, which receive both satellite and traditional radio broadcasts. Figure 7: Net OEM subscriber additions for XM, 2002-2004

YearNet subscriber additions
#% change from previous year

2002 OEM8673-
2003 OEM669,7187,624.9
2004 OEM989,78147.8
ii)Distribution through Retail: While XM and Sirius have formed partnerships with a variety of electronics retailers and mass merchandisers, industry leaders have indicated that OEM holds more potential than retail in the long run. The retail market is primarily served by larger retailers such as Best Buy, Circuit City, Wal-Mart and Sears, but also includes specialized retailers like Tweeter, Good Guys, RadioShack, and Advance Auto Parts. Figure 8: Net retail subscriber additions, 2002-2004

YearNet subscriber additions
#% change from previous year

2002 retail338,480
2003 retail669,71897.9
2004 retail (est.)752,00312.3
Source: Mintel/XM Satellite Radio/Sirius Satellite Radio
iii)Distribution through Rental car: Subscriptions through the rental car segment consist of satellite radio receivers installed in rental car vehicles. Average monthly subscription revenue through this channel is typically lower than other channels. In the first quarter of 2004, XM reported the average monthly subscription for rental cars to be $7.72, compared to $8.66 for the rental, OEM and retail channels combined. Figure 9: Net rental car subscriber additions, 2002-2004

YearNet subscriber additions
#% change from previous year

2002 rental car0-
2003 rental car20,792
2004 rental car (est.)30,92348.7
Source: Mintel/XM Satellite Radio/Sirius Satellite Radio
4)Industry Overview
a.Satellite radio Market:
While the concept for satellite radio began development in the early 1990s, consumers were not introduced to the technology until 2001. Since that time, satellite radio has grown as a result of the efforts of two firms—XM Satellite Radio and Sirius Satellite Radio. Both firms were scheduled to launch in Fall 2001, but Sirius was delayed for eight months due to chipset conflicts. The satellite radio industry finished 2003 with $91 million in subscription sales. This represents a jump from $16 million in 2002, rising from less...
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