SiriusXM and Pandora: Perfect Together
SiriusXM has been on a very strong trajectory when it comes to subscribers. The number of subs directly correlates to their bottom line. However, as of late, the number of subs has been slowing down. This can be attributed to fewer new vehicle sales, and the younger generation not opting for the service - especially those who are constantly tethered to their iPhones. To hedge against potentially dwindling satellite radio service customers (as online mobile services such as Spotify continue to grow), the company purchased Pandora to hedge against losing subscribers. Moreover, the two services plan to combine their core competencies to offer something to customers that has not been heard of before. Imagine curated content with DJs when you want it, or personally curated content available on the fly for your next road trip.
The deal breaks down like this: SiriusXM will make a $480 million strategic cash investment in Pandora. Through this agreement, SiriusXM gains control of the leading U.S. provider of ad-supported digital radio. Pandora has a loyal audience of nearly 100 million listeners in the U.S. Pandora is the leading player in the burgeoning digital audio advertising market in the U.S., but Spotify numbers trump Pandora’s worldwide. This helps complement SiriusXM, where the signal is only available in North America. The capital provided through the SiriusXM investment will allow Pandora to make targeted investments and capitalize on opportunities to build on its position in the streaming radio business in our market.
“This strategic investment in Pandora represents a unique opportunity for SiriusXM to create value for its stockholders by investing in the leader in the ad-supported digital radio business, a space where SiriusXM does not play today,” according to Jim Meyer, CEO of SiriusXM. “Pandora’s large user base and its ability to provide listeners with a personalized music experience are tremendous assets. With its strong technology and new product offerings, we believe there are exciting opportunities for Pandora to accelerate its growth and increase value for Pandora and SiriusXM stockholders.”
Sirius has made forays into personally-curated content available on the SiriusXM app. But when it comes to the jobsite, Pandora and Spotify seem to be favored. This can be heard by casually listening to a random Millennial worker who puts on either service to jam out at work. Typically, the SiriusXM experience ends the moment the customer turns off the ignition switch (or in this day and age, presses the ignition button to end their ride).
A Drive for Long-Term Growth
Sirius XM is looking to drive long-term growth by capitalizing on cross-promotion opportunities between SiriusXM’s base of more than 36 million subscribers across North America and Pandora’s millions of active monthly users. That would represent the largest digital audio audience in the U.S. Said Meyer: “SiriusXM’s exclusive content and programming with Pandora’s ad-supported and subscription tiers [can combine] to create unique audio packages, while also utilizing SiriusXM’s extensive automotive relationships to drive Pandora’s in-car distribution.” The combined company wants to continue investing in content, technology, innovation, and expanded monetization opportunities through ad-supported and subscription services in and out of the vehicle.
All of this could be good for artists, too. Imagine listening to a new artist on SiriusXM in the car, and wanting to continue that musical journey when you get to the office for background music. It could all be done seamlessly. “We want to create a promotional platform for emerging and established artists, curated and personalized in ways to deliver the most compelling audio experience that connects artists to their fan bases, as well as new listeners,” Meyer said. Roger Lynch, the CEO of Pandora, noted, “We've made tremendous progress in our efforts to lead in digital audio. Together with SiriusXM, we’re even better-positioned to take advantage of the huge opportunities we see in audio entertainment, including growing our advertising business and expanding our subscription offerings. The powerful combination of SiriusXM’s content, position in the car, and premium subscription products, along with the biggest audio streaming service in the U.S., will create the world’s largest audio entertainment company.”
Meyer summed up with acquisition with this quote: “We have long respected Pandora and their team for their popular consumer offering that has attracted a massive audience, and have been impressed by Pandora’s strategic progress and stronger execution. We believe there are significant opportunities to create value for both companies’ stockholders by combining our complementary businesses. The addition of Pandora diversifies SiriusXM’s revenue streams with the U.S.’s largest ad-supported audio offering, broadens our technical capabilities, and represents an exciting next step in our efforts to expand our reach out of the car even further. Through targeted investments, we see significant opportunities to drive innovation that will accelerate growth beyond what would be available to the separate companies, and does so in a way that also benefits consumers, artists, and the broader content communities. Together, we will deliver even more of the best content on radio to our passionate and loyal listeners, and attract new listeners, across our two platforms.”
As retailers, we will not know how future head units will look with option for both services. Luckily, in this day and age of touchscreen head units, new software and updates should be able to accommodate what the merger throws at us.
We reached out to Melvin Diaz, senior business manager of New Business Development at Alpine Electronics, who said: “SiriusXM and Pandora have both reinvented the way people listen to music, inside and outside the vehicle, to create a seamless music experience. Given our history of product innovation with both companies, we look forward to working closely with them to bring to market new and innovative entertainment experiences.”
We also reached out to Pioneer Electronics who did not have an official comment but noted it is a positive move for both companies and it will make each service better, for the consumer as well as their business partners. The strengths of each individual company will reinforce and improve the other, particularly with respect to consumer preferences, regional and national promotional opportunities and brand recognition.
Extra: SiriusXM Going Automatic at Car Dealers
There have been a lot of OBD II data-based recorders with connectivity. The most familiar one to the aftermarket is Car Connection by VOXX Electronics. Now SiriusXM is getting in on the action with its Automatic sub-brand. It is the first and only aftermarket device available through dealerships with a free trial subscription. Dealers can offer consenting customers a trial subscription that includes three free years of Automatic’s Crash Alert and Connected Maintenance services, as well as six free months of premium services, such as roadside assistance. The goal is to stay connected to the customer.
According to the company, Automatic delivers benefits to both customers and auto dealers. In addition to the important safety and convenience features, drivers will receive service alerts and recall notifications for their connected vehicle. Dealers, at no additional cost to them, can be notified when their customers are due for service and will have the ability to invite those customers back to their dealership for maintenance or repairs. This can be very lucrative for dealers who want to capitalize on recalls, and can even target certain customers so they can perform repair work in waves, so they don’t get inundated.
Joe Verbrugge, executive vice president of Emerging Business for SiriusXM, stated: “This Automatic service introduction benefits from the combined resources and capabilities of Automatic and
SiriusXM in the area of vehicle connectivity and product development to create a killer offering
for dealers and their customers. The Automatic platform delivers safety and convenience services for consumers that truly enhance the vehicle ownership experience, and the Automatic Dealer Program gives dealers the ability to provide these benefits to their customers, stay connected to those
driving off their lot, and increase loyalty and future service lane track.”
Being able to communicate with vehicles and owners after they leave the lot is a surefire way to make everyone’s lives easier.