Subscriber growth no longer critical to success of Sirius XM


seekingalphaSeeking Alpha’s Crunching Numbers reports more than three years ago he wrote  an article that looked at the basic metrics of the Sirius XM Holdings (SIRI) subscription model. It was an exercise to determine where the subscriber growth was heading. That article suggested that the subscription model that was dependent on new car sales could be reaching subscriber equilibrium – new subscribers would only be sufficient to replace subscriber losses, and the growth in subscribers would cease – much sooner than I had originally thought would occur. It was based on a fairly simple formula using the then-current rates for churn (2.0%), conversion rate (45%), a new car penetration rate that was somewhat higher than the actual rate (65%) and new vehicle sales increasing to more normal levels.

Using those metrics and annual sales of new cars hitting 16 million resulted in the following formula:

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