Wednesday, July 13, 2016

SiriusXM Not Quite Ready To Unveil SXM17 Connectivity

When Sirius XM Holdings finally rolls out its much-anticipated SXM 17 technology, the company should be able to deliver new features to listeners, such as on-demand programming, according to The Motley Fool.

It should also give the company its clearest picture yet of what subscribers are tuning into and what their listening habits are. That's something that should benefit Sirius in a variety of ways, from making programming decisions to negotiating contracts with on-air talent.

But those aren't the only benefits the two-way interactivity is expected to provide -- and some others may have a more immediate and direct impact on the company's bottom line.

Sirius thinks the direct, two-way connection will both improve its subscriber retention and boost its rate of converting free tryouts into paying subscribers.

Customer service and billing make up about 11% of Sirius XM's overall operating expenses. And it's an area that's been growing faster than others, up more than 56% between 2010 and 2015. That outpaced the company's overall expenses, which grew by 44% over that period.

David Frear
Sirius expects this new technology to help improve aspects of customer service.

Speaking to analysts in June, Sirius CFO David Frear gave an example of a subscriber whose credit card expires. When that happens now, customer service has to start the process of trying to contact the subscriber. It may do that via email, snail mail, phone, or all three, depending on what kind of success the reps have in making contact.

Frear contrasted that process to how it will happen with SXM 17, when the customer turns on the radio and is greeted by a message letting him or her know to provide an updated card for billing.

"And it is a contextually sort of relevant and resonating way of communicating with a customer," Frear said, adding, "they are sitting and they are listening to their radio and something pops on the screen."

Exactly when we'll start to see the SXM 17 service rolling out in cars is unclear, but it probably won't be for at least another year. The company says some automakers are expected to begin testing the technology later this year, but we probably shouldn't see the features being offered until late 2017 or 2018.

Having a crystal-clear view of what people are listening to should provide long-term benefits to the company in making decisions about programming and talent, from channel lineup decisions to live event broadcasting to negotiating contracts with on-air hosts and talent.

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