On July 29, 2008, the nation’s two subscription-based satellite radio companies officially completed their merger. Washington, D.C.-based XM Satellite Radio and New York-based Sirius Satellite Radio were now one. And, in retrospect, it saved satellite radio’s fiscal failures as deep debt eventually shifted to profit pops as Sirius XM fought traditional radio while acquiring streaming audio pioneer Pandora in the coming years.
Today led by CEO Jennifer Witz, Sirius XM Holdings has come a long way in 13 years. Now, it is contemplating a move that may eventually end the Sirius legacy of the satcaster, technically speaking.
Speaking Monday morning at the Bank of America Media, Communications and Entertainment Conference, Witz hinted at the eventual cessation of one of its satellite radio platforms by the middle of the decade. At the same time, Sirius XM is moving forward with internet-connected next-generation satellite radio hardware — a sign that 5G delivery of Sirius XM streams could eventually phase out satellite-delivered audio channels altogether.
As of today, some Sirius XM channels accessible on an OEM in-dash receiver offer sound quality akin to a 16 kbps audio stream, such as “Verge,” focused on Canadian Alternative Rock. Given the limited audience, Sirius XM likely kept the audio quality low due to limited capacity of its streaming bits. On the Sirius XM app, there is no limit. Additionally, there are exclusive channels that are available on the app.
The comments by Witz were first reported by Matthew Keys at TheDesk.net.
Prior to the merger of Sirius and XM, a fleet of independent satellites brought station channels encoded using different methods. Translation: Sirius had its own receivers, while XM had its own, too.
Following the merger, these separate satellites were necessary to ensure continuity among its now-combined subscriber base, and to honor pre-existing OEM contracts. Those deals saw automakers work exclusively with either Sirius or XM.
Still, a phase-out of the Sirius-based platform transpired. “Plug-and-play” radios and aftermarket receivers were built on the XM platform.
Now, come 2027, older automobiles with built-in satellite radio on the Sirius platform could become obsolete. Given the average age of automobiles in the U.S., and the percentage of drivers who lease automobiles, those shut out of Sirius XM could be small.
A 360L STANDARD AHEAD
In her comments at the BofA conference, Witz said car radio subscriptions “will continue to remain the foundation of our business, and we’re working hard to maintain our dominant position there.” But, Matthew Keys reports, she added that newer technology allowed the in-car experience to evolve into one where “sometime in the coming years … we’ll only really need one of our two broadcast systems to deliver the current business.”
Since 2018, SiriusXM’s next-generation broadcast platform 360L, which combines traditional satellite radio delivery with an expanded lineup of channels, Pandora-like stations and on-demand content offered through its streaming service, has been seen in more automobile brands. As of now, Audi, BMW, Ford, General Motors, and Volkswagen are among those offering 360L access in-dash. By the end of 2021, one in four new cars will have 360L receivers; in four years, that could grow to as much as 80%.
“It’ll be different for every automaker, but we do expect 360L to be the default SiriusXM platform at all of the OEMs over time,” Witz said.
With Sirius satellite services expected to be shut down within seven years, spectrum would be freed up. This would allow SiriusXM, if it chooses, to widen the bit rate for such channels as “Verge.” Alternatively, it could bring more channels to the dash, or be used for satellite broadcast weather, navigation and traffic through its aviation and marine businesses, TheDesk.net points out.
Sirius XM does not disclose how many customers it has based on the legacy platforms it offers to in-car consumers.
