Satellite radio provider SiriusXM (NASDAQ: SIRI) is getting serious about its subscription rates with its second price hike in the last year, reports Music Business Worldwide. Effective April 27, a $1 price increase will impact SiriusXM’s Select package and SiriusXM Internet Radio products. Last June SiriusXM raised rates on its other packages by $1 a month: Mostly Music, News, Sports & Talk, Premier and All Access. Last year’s price hike doesn’t seem to have hurt SiriusXM at all.
In its 2015 year-end financials, the company reported it had a total of about 29.6 million subscribers at the end of 2015, an 8% increase over the previous year. In December alone, SiriusXM added 2.283 million net new subscribers, its highest growth since 2007, prior to the merge of Sirius and XM, and 30% higher than its 2014 figure, an addition of 1.752 million net new subscribers. With 29.6 million subscribers paying $1 more per month, that’s a revenue increase of $355.2 million per year. Not too shabby for a company whose 2015 revenue was up 9% to a record $4.6 billion and that reported 2015 net income of $510 million. Jim Meyer, CEO for SiriusXM, commented on last year’s record subscriber growth:
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“We produced our best subscriber growth in eight years, taking our subscriber base to approximately 29.6 million. The company also set records in 2015 for revenue, adjusted EBITDA, and free cash flow. We are investing in new marketing capabilities, our connected vehicle business, new satellites, a next generation wideband chipset and, most importantly, our world-class and exclusive content. We expect these investments, together with our long-standing focus on execution, will help us continue our long history of strong, profitable growth.”
“SiriusXM’s strong, resilient business model and ability to deploy capital to benefit our stockholders present a compelling investment opportunity. Our content bundle of commercial-free music channels, live sports events, expanded comedy and entertainment programming remains a unique value in audio entertainment. And the development and deployment of our next-generation SXM17 entertainment platform and telematics services in connected vehicles position us well to continue our enviable place in the dashboard.”
In addition to the planned price hike, SiriusXM estimates it will add approximately 1.4 million net new subscribers and earn revenue of approximately $4.9 million.
Despite a rate increase for many of its packages last summer, SiriusXM doesn’t seem to have lost any subscribers as a result. However, the company’s guidance for subscriber growth in 2016 is about 880,000 subscribers less than they actually added last year, so we suspect SiriusXM is accounting for slower growth in 2016.
In spite of the price hike, SiriusXM is raking in some serious cash and has the right mix of package options, pricing and original content, striking a balance between what subscribers want versus what they’re willing to pay. From a best practices perspective, SiriusXM is a great example to other subscription companies.
A review of their website shows a variety of subscription package options, depending on a subscriber’s needs, tastes and budget, neatly laid out for easy comparison. Their product mix is phenomenal, and their business practices (free trial, auto-renewal, transparency, FAQs, sign-up page, welcome kit, promoting and selling through partners, etc.) are perfect for attracting and keeping subscribers. Well done, SiriusXM!