February 17, 2009

In her debut post at TechCrunch, Sarah Lacey talks about some of the challenges being faced by Sirius and Blu-ray. Her two points can be boiled down to a misaken assumption by the two technologies’ backers that that the past will repeat, especially in the Web era. Many of the commenters have pointed out some flaws in her arguments (Diggnation vs. Dark Knight?), but I offer these points in response.

It may be the case that Blu-ray disc revenues (or even players) are not growing fast enough to offset the decline in their DVD counterparts, but we are currently in a transition time between the two technologies.

About the only things that Sirius and Blu-ray have in common is a focus on content quality and appeal to an older demographic. While Sarah Lacey uses a “focus group of two” (doubling the n from the usual cliche) in her and her husband to discuss the myriad alternatives available to watch movies today, these are currently niche alternatives and, as I’ve often said, while Netflix streaming may be fine for renting, digital distribution has not provided a convenient alternative to discs for ownership.

Ironically, one of the products that has the best chance of broadening the audience for movie streaming services is Blu-ray players. Blu-ray’s biggest competitor – the DVD – is at an inherent disadvantage as the -price gap narrows for hardware. Sirius and XM, on the other hand, could not effectively follow where consumers went for their music – to PCs and portable players. MP3 and Internet radio options for the vehicle aren’t great, either, but consumers have coped or done without.

Satellite radio may have had a loose precedent in the success of cable and satellite TV, but the usage scenario was very different. A majority of US consumers spend enough time at home consuming quality entertainment to justify the investment in paid television service; not so for satellite radio. In fact, outside of capital expenditures, Sirius and XM ran up huge debt on subscriber costs and acquiring exclusive content. While Blu-ray certainly has entailed marketing costs, its battle with HD-DVD was one that was much more lopsided than Sirius vs. XM. Yes, Blu-ray, like Sirius XM, faces competition from Internet sources, but the mainstream of the market is its to lose over at least the next five years.

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September 28, 2008

image With its new and vastly improved portable player, Slacker’s trek may have entered “the next generation.” but its U.S. plans may be moving away from “the final frontier.” Slacker long had plans for a car dock that would enable it to receive programming via satellite, but VP of Marketing Jonathan Sasse told me last week that the company is now looking to leverage its satellite technology primarily in developing economies due to the strength of its caching technology and alternative high-speed delivery methods becoming more viable.

When I asked him if the merger of Sirius and XM, which looked far less likely to happen in Slacker’s early days, had anything do with the decision, he said it did not. The proposed price for Sirius XM’s music-only tier is competitive with Slacker’s premium radio option. Slacker maintains that it still has the upper hand, though, because of the ability to skip tracks, even as a limited (but in my opinion generous) option for non-paying listeners.

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March 25, 2008

sirius-xm-merger.jpgSirius and XM have convinced the Department of Justice that its merger won’t create a monopoly in the radio, or more broadly, music playback, space. While the FCC is expected to follow suit with the DoJ, there is a rush of parties that are looking to add terms and conditions to the merger. Censorship on satellite radio? What would be the point of a premium alternative to terrestrial?

It’s certainly true that there are far more options available for high-quality digital music playback since the time that XM started broadcasting from space. The iPod is frequently brought up as a competitor, but I’ve never really thought of it as a major one. First, the iPod accelerated its move into the vehicle rather late in its rise to popularity and many of the solutions are primitive or awkward.

I’suspect that I, like many MP3 player owners, have music on their players to which they’ve never listened. Mostly, though, particularly for Apple’s ecosystem that has never been as aggressive about music discovery as, say, Rhapsody, iPods are about playing back what you have, not what you don’t. And keeping them fresh requires round-trips between the house and car. So, what satellites really buy the companies better than any competing technology today (save terrestrial radio, which was around at its launch) is direct and unfettered access to the vehicle

Wireless technologies such as 4G and WiMAX have the potential to present a credible no-hassle alternative to satellite radio, but the cost structures don’t support the infrastructure required to deliver it for the foreseeable future. One could argue that they didn’t for XM or Sirius, either. But with a reduced customer acquisition marketing burden, their expenses should become more manageable. In the meantime, the Slacker Portable satellite add-on looks like it will be promising alternative when it arrives.

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