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SiriusxmThe audio entertainment company, known as a commercial-free option for in-car radio for a long time, has been betting on advertising to pursue its business.
On Tuesday, the company launched its first advertising membership plan to hear a car called SeriusXM Play. This is a cheaper option compared to its long-standing offer and will cost less than $ 7 each month for in-car and streaming. The company said it offers a limited set of advertisements on its music, sports, news and talk shows.
Siriusxm wants to advertise similarly as its media counterparts in traditional TV and streaming space to run revenue and profit and maintain customers. As the competition is hot, especially with other audio options, siriusxm conditions that a cheaper, advertising-supported option will help more in-car-free testing consumers to convert consumers into long-term customers.
The option will currently be available on a limited basis, but Siriusxm is expected to provide package for about 100 million vehicles by the end of 2025. More details on plans and package pricing will be available later this year.
While customers of Siriusxm Play will initially have access to more than 130 music and talk channels, additional channels will be added over time, the company said.
Popular talk radio host Howard Stern, as well as live sports play-plays and some artists-led music channels will be exclusive to advertising customers in the car. Siriusxm offers a variety of commercial-free packages between $ 9.99 and $ 24.98 per month.
While Siriusxm is known for its in-car service, it also offers a streaming app and another music streaming service is the owner of Pendora, which has its own advertising plans.
Advertise
Jennifer Witz, the Chief Executive Officer of SeriusXM speaks on stage during the SeriusXM Next Generation: Industry and Press Preview at Test Skylights in Shed on 8 November 2023 in New York City.
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Siriusxm has already identified a major targeted audience for its advertising supported tier: drivers have recently bought a car and do not renew Siriusxm service after their free test is over, officials told CNBC.
In an interview, Chief Operating Officer Wayne Thorsen said, “The idea of advertising for SeriusXM’s in-car business has been a long time.”
The company started offering a free, advertising version with limited materials to select vehicles in 2024 and select vehicles in 2024. Thorsen said that it is the same for the free tier of SPOTIFY and is used as a way to win back to customers who leave free tests and push them to advanced, paid plans.
The new advertising scheme launched on Tuesday is a different experience from both this and the main advertising Siriusxm experience, and the company does not expect most of its users to switch.
He said, “There are many people who do not change when we are in trial funnel. They prefer service, and then the price comes,” he said.
The length of the SeriusXM in-car free trial varies, with vast majority extending for three months.
“What does this mean [for SiriusXM]I think the example I am using is Netflix. It was a very dilemma, “Thorsen said.
For years, Netflix Objectioned When adding advertisements to your streaming service.
Thorsen said, “He found himself, at least in the US, with a slow growth.
Netflix And both Siriusxm already have a lot of customers, a natural limited of development. Netflix has stopped reporting its quarterly customer development to focus on its share, its profitability and other matrix. When the company reported damage in 2022, its share price became a hit. Since starting a crack on an advertising plan and password sharing, however, Netflix’s shares increased.
Meanwhile, siriusxm also faces competitive pressures. That is, there is the rise of technology that allows consumers to stream other services in their cars, such as Spotify And Apple music. While the company has ownership Pendora since 2019, it has focused on the construction of Siriusxm Streaming-Cowl app in recent years.
Driving profits
In front of these challenges, Siriusxm is bending over the fact that he has long considered his strength – its position in the car – CEOs run by Jennifer Witz.
After this month split From John Malon Liberty media Empire, siriusxm Announced An updated strategic plan aimed at focusing on its in-car radio business in December and a new focus on advertising. It also declared Thorsen as COO and provided new financial goals to investors.
Siriusxm stated that it would remove marketing and other resources, which is called “high-to-time” audiences in streaming, which often to focus on resources on main revenue-generating segments. ” In-car membership makes 90% of its customer base.
At an investor conference in May, Witz said, “We entered this year with a very clear focus, which we do best, which is super-serving our main audience segments with our unmatched distribution in the car and is our very unique material focused on live, exclusive and human-conurated materials.” “I am confident that we are on the right path.”
Siriusxm finished with 33 million total customers in its first quarter, shortage of 303,000 customers during the period. The gross profit for Siriusxm was $ 937 million, which was 6% below the pre-year period, with a gross margin of 59%, was 1 percent less than the period of the previous year.
Overall, siriusxm Informed The quarterly revenue for its most recent quarter declines by $ 2.07 billion, 4% from the previous year, and a net income of $ 204 million, below $ 241 million. The results also include Pendora and other off-platform businesses. Company’s next earning report Comes On 31 July.
Advertisement Revenue is already playing a role in business. Siriusxm had about $ 1.8 billion in total advertising revenue in 2024. In May, it reported $ 394 million in Ad Revenue for its most recent quarter, which was a decline from the same period in the previous year. This was partially offset by the growing podcast business.
Nevertheless, the advertisement-supported membership plan starts during a weak point for the advertising market.
The advertising market in traditional media has been soft in recent years, especially due to comprehensive economic challenges. it was Enhanced This year due to the president Donald TrumpTrade policies that throw corporate expenses in question.
Scott Walker, Chief Advertising Revenue Officer of SeriusXM, called the current advertising environment “unpredictable”.
The walker said, “Our business flows and flows with macroement, and certainly there are many companies that have been interrupted by tariff noise, especially with supply chains, especially abroad,” Walker said.
