Satellite radio tunes into consumers

DSN Retailing Today, Nov 22, 2004

Satellite radio got a shot in the arm this fall as a popular and controversial radio personality announced he was leaving the airwaves for a satellite signal, and with a wave of his microphone, Howard Stern had the fledgling industry on everyone's lips. After more than two years on the market, satellite radio is getting a lot of attention in the mainstream press raising consumer awareness, and new products are making accessing the content easier and are available at more outlets than ever before.

That radio's notorious bad boy is fleeing mainstream radio for a subscription-based program outside the reach of the FCC's decency rules has raised the attention level for not only his new host, Sirius, which hopes to increase its subscription base, but also for competitor XM Radio, itself the new home of the controversial Opie and Anthony show.

Satellite radio launched in 2001, with XM going live approximately eight months prior to Sirius. As a result, the first to market had more than 2.5 million subscribers as of October 2004, while Sirius posted slightly more than 700,000.

"Clearly satellite radio is a big story and it's great for the aftermarket," said Scan Wargo, director of industry analysis for the Consumer Electronics Association. "We're seeing some really good gains." The number of units shipped increased 102% year to date, representing a 78% increase in dollars for the category, according to the CEA.

"We were seeing pretty healthy increases in sales before the content announcements," said Wargo. "We were on this growth curve already." That growth is largely fueled by new product introductions that include plug-and-play units that allow consumers to access the satellite signal in both the car and at home. New portable models are opening up even more possibilities--and not only for consumers. The Delphi MyFi portable product not only receives XM radio signals, but also features an internal hard drive that can record up to five hours of Programming for and works like a Tivo for radio.

With products like this, satellite radio receivers and accessories are no longer relegated to the automotive area, giving retailers a greater variety of display options. Plug-and-play units can easily be merchandised in home audio, while the portable models can occupy the much-coveted place next to the popular iPods and MP3 players.

"We have an entire range of products that can merit its own display area and doesn't take up a lot of space," said XM Satellite Radio spokesman, Chance Patterson. "[And] despite the growth in the factory-installed market in the recent past, we expect that the retail aftermarket is going to represent more than 50% of our business in years to come."

XM is available as a factory-installed option in more than 100 while Sirius is in approximately 80 models and recently added BMW and Volvo to its list. And while the product was expected to give a muchneeded boost to the automotive aftermarket, the radios are clearly crossing category aisles.