Sirius XM Holdings (NASDAQ:SIRI) has failed to gain serious traction outside of the car market, but it's hoping it can teach Amazon.com's (NASDAQ:AMZN) Alexa some new tricks. The satellite radio monopoly is teaming up with the world's leading online retailer to push Sirius XM's broadcasts as streams through Amazon's Echo smart speaker devices.
The two companies are offering up some heavy cross-promotions across their products. Eligible customers who buy or already own an Amazon Echo device can get three free months of SiriusXM Premier Streaming or SiriusXM All Access service. Folks who commit to at least a six-month subscription of either service at promotional rates will receive an Amazon Echo Dot at no additional charge. It's not clear who is subsidizing either offer, but it's fair to say that Sirius XM is the one with the most to gain.
Pumping up the volume
Sirius XM hasn't had a problem attracting subscribers to its flagship satellite radio service. It closed out the second quarter with 33.5 million subscribers -- with 28.2 million of those on the platform as self-pay accounts. It grew its self-pay subscriber rolls by 483,000 during the three-month period.
The appeal of Sirius XM has historically been the greatest with commuters in cars and long-distance truckers. Despite rates that have inched higher over the years and the allure of streaming apps that play seamlessly through connected cars, self-pay churn is near an all-time low. Drivers stick around. They see the value in a premium radio service that follows them from coast to coast.
Winning over streaming users has been more challenging. Sirius XM charges the same $15.99 a month price for its online product as it does for its basic receiver-based plan, and that's a heavy load in an industry where the leading premium streaming services charge $10 or less. Sirius XM does sell a SiriusXM All Access subscription that costs drivers just $5 more a month to add to their existing receiver-based accounts -- and that's the sweet spot, here.
Sirius XM is trying to live up to the promise of its "Bring Us Home" marketing campaign. It's a golden opportunity to accelerate its revenue growth. Whether it attracts new subscribers to the platform or gets existing members to pay more, it's all incremental for a model that is high on fixed costs and low on the variable end outside of music licensing royalties, which it passes on to subscribers anyway.
Sirius XM is already in the process of acquiring Pandora (NYSE:P), a move that will beef up its currently fledgling digital initiatives. Buying Pandora wasn't popular with investors when the deal was announced last month. Sirius XM stock fell by nearly the entire amount of the 85% of Pandora that it doesn't already own. However, between Pandora and, now, this savvy Amazon Echo-fueled initiative, it's fair to say that Sirius XM's future won't be limited to commuters and truckers.