Thursday, January 25, 2007

SatChoice Cards

January 25, 2007

In an earlier article I spoke about content, choices and freedom that satellite radio offers. As part of that article I outlined a theoretical concept of the creation of "cards" to act as the mechanism for subscriptions. The article garnered some comments, and I felt it would be a good topic for an article.

The term "card" I am referring is not a credit card type device, but rather a device along the lines of the XM passport that is used with their Nexus units. Picture if you will a standardized “card”, such as an SD memory card, that had the subscribers subscription attached to it.

For the purposes of this segment, we will assume two separate satellite radio entities with no merger.

The "SiriusCard" and the "XMCard"

The SiriusCard and the XMCard would be small devices that carry with them a subscription for satellite radio. Devices such as plug and play units, and OEM receivers would be "dumb" and inoperable unless a card is inserted into a slot in the device. The insertion of the card makes the device a "smart device" that can then receive a satellite radio signal, provided that the card is activated and the device is capable of delivering the service requested. In this scenario, some devices may be Sirius only or XM only, but the OEM head units would be capable of receiving either card. Cards would retail for $30 and would require activation by the subscriber.

The "SatChoice" Card

The "SatChoice" card would be similar in nature to the individual cards, but would be capable of delivering either or both services to the consumer. "SatChoice" cards would work in "SatChoice" capable receivers and all OEM receivers would be "SatChoice" capable. A "SatChoice" card will also work in segregated receivers, but an "XMCard" receiver for example would only deliver XM content. Sirius and XM could develop a line of "SatChoice" receivers for both the OEM and the retail markets, and "SatChoice" as a standard would phase out the individual Sirius Cards and XMCards over time. A "SatChoice" card would retail for $45 and would require a subscription to one or both companies in order to operate.

All receivers going forward would be based on the "card" technology, and thus upgrades by consumers will happen naturally over time.

The Benefits for Consumers:

- Consumers would be able to take their subscription with them from the car to other devices such as a wearable device or home receiver.

- The technology could be adapted to other devices such as cell phones, PDA’s, etc. A "SatChoice" card becomes more valuable to a consumer that has a wide variety of applications.

- The need for multiple subscriptions simply for convenience goes away.

- Consumers can seek out and buy devices that are "SatChoice" ready. The need to understand and comprehend the individual services technology goes away, and the consumer can sample each service prior to making their decision.

- Because of the ease with which a satellite radio consumer can switch, the services both will have a focus on bettering their content offering. Consumers choice will be based on the content.

The Benefits for Sirius and XM:

- A simplified platform for OEM's to implement without the worry of attaching themselves to the coat-tails of one service or the other. The installation rate could grow substantially.

- The ability to market satellite radio as a medium and focus on the choices and variety satellite radio has to offer.

- Because of flexibility, there would be a small sacrifice in "family plans", but not so much so that it would carry a dramatic impact. The freedom that "SatChoice" cards offer would easily enable a modest subscription price rate hike.

- Cards could be marketed with a free month of service (perhaps up to 3 months), giving a consumer buying an car (new or used) the ability to try satellite radio inexpensively, without obligation, and without the difficulty of installing hardware, antennas, etc.

- The marketing of satellite radio could center on the "SatChoice" tag line. Car Makers could tout their cars are "SatChoice" ready or "SatChoice" Standard, and the concept gets consumers to first accept the concept of satellite radio as a whole prior to making a provider selection.

- The numbers of people who will at least try satellite radio would increase, especially if they are seeing value in the card because of a trial period. The cards themselves become the focal point to the consumer, not the hardware. Having a "SatChoice" card simplifies the concept in the eyes of the consumer.

- The switch to such a system would carry benefits such that existing consumers would be compelled to upgrade on their own accord. This minimizes the satellite radio providers having to subsidize the upgrades. There will be a period of time where the older receivers will need to be upgraded, but the benefits received from "SatCard" implementation will far outweigh the costs of upgrading an older piece of equipment.

In my opinion, there is potential here for satellite radio to literally re-invent itself in the eyes of the consumer. Should a merger happen, much of what is stated above is still very applicable, and the opportunities get even better, such as every "SatChoice" card coming with immediate and permanent access to a sampling of commercial based channels for free. Think about a consumer, for a one time cost of $45 (to buy a "SatChoice"card), getting access to the satellite radio concept via 10 channels of commercial based or commercially sponsored music (less commercials than AM or FM). Suddenly something such as a "SatChoice" card becomes a revenue generator.

All of this is simply a concept at this point, and some may argue that these companies can "go-it-alone", but in my mind there is a huge untapped potential in a "SatChoice" card concept, and the acceptance and proliferation of satellite radio would expand exponentially.

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1/25/2007 11:21:00 AM

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  • I love the idea. Don't know that it would be needed under a merger scenario, but otherwise it would be a revenue generator.

    By Anonymous Anonymous, at January 25, 2007 2:54 PM  

  • What a nit-wit idea. Right after they figure out how not to go belly up, they should do this.

    This idea is like asking a drowning man if he'd like a tuna fish sandwich.

    More satrad BS.

    By Anonymous Anonymous, at January 25, 2007 7:41 PM  

  • Until Sirius has an actual Sirius Card on the market, XM has no reason to do this. They have all the convenience and opportunities offered by this new way. Why would they assist their competitor to do the same... I know this makes logical sense, but from a business stand piont it would only help Sirius (since XM is already taking advantage of this technology). Sirius needs to get in the game first, and then maybe it would work..

    By Anonymous Anonymous, at January 26, 2007 11:49 AM  

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