SiriusXM Road Testing Its Nonlinear SXM17 Platform
SiriusXM has deployed several demonstration cars to road test its SXM17 platform, which will incorporate two-way cellular connectivity into the company's traditional satellite radio and let it offer nonlinear content, CEO Jim Meyer said Tuesday during the company's Q2 2016 earnings call. The SXM17 platform it's developing with a number of automakers (see 1604280042) "breaks down the big barrier we live with today as a one-way broadcaster" and will let it offer customized playlists and on-demand content, Meyer said. He wouldn't discuss a time frame for SXM17 deployment, saying the company will announce details about timing over the next year.
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Meyer also said the SXM17 capability has the company internally discussing whether to move toward more local or targeted programming. "It's definitely something we're thinking about," he said.
For the quarter, SiriusXM added 587,000 net new subscribers, ending the quarter with 30.6 million, up 8 percent year over year, despite new car sales being flat for the quarter, Chief Financial Officer David Frear said. Meyer said the company's expectations are that its system ends up being in about 75 percent of all new cars sold in the U.S. About 29 percent of used cars sold in the first half of this year were equipped with factory-installed satellite radio, up from 26 percent in the first half of 2015, and used-car penetration will continue to grow, Meyer said.
The company increased its 2016 guidance, saying it expects 1.6 million net new self-pay subscribers and 1.7 million total net new subscribers for the year, up from its previous projections of 1.4 million and 1.6 million, respectively. It also raised its revenue guidance for the year from $4.9 billion to $5 billion. SiriusXM stock closed Tuesday at $4.35, up 4.8 percent.
Meyer also said Tuesday the company signed a deal with Fiat Chrysler for creation of connected vehicle services. With similar deals already in place with such automakers as Toyota, Lexus, Honda and Acura, "our connected vehicle platform is poised to cover a substantial part of the audio industry," Meyer said. The company is building the connected vehicle platform now, with a number of programs with automakers launching in 2017, when substantially more vehicles with SiriusXM-connected technology will be available to consumers, Meyer said.
The company is close to wrapping up procurement for construction of its next two satellites, which will replace XM-3 and XM-4 and be launched in 2019 and 2020, Frear said. Construction should start this fall, he said.
Asked about potential SiriusXM interest in online streaming, amid reports SiriusXM majority shareholder Liberty Media made a bid for streaming service Pandora with thoughts of bundling it with the satellite radio operator, Meyer said, "We look at everything hard. You should assume we know an awful lot about Pandora [and] a lot of the other streaming services out there." But, he said, streaming has "zero impact" on SiriusXM, with former customers almost always returning to terrestrial FM radio. "In terms of upgrading our product to consumers, I don't believe we need to make any kind of acquisition" of a streaming company, he said. The company previously has said buying a streaming company was unlikely (see 1606080015).