SiriusXM may have 34 million satellite radio subscribers driving around America, but through a series of calculated moves CEO Jennifer Witz says they are making inroads into the digital audio market. That includes a streaming-only option to its satellite radio content, its Pandora app, and burgeoning podcasting business.
“We are evolving our business to focus on listening both in and outside the vehicle,” Witz said Thursday during a conference call with analysts.
For between $4.99 and $10.99, SiriusXM now offers the option for listeners to scrap the special receiver and instead listen to an app on any mobile device. As the car sales pipeline to new subscribers remains weakened by an auto industry still struggling with supply chain issues, the move could not have come at a better time.
“While our in-car subscription growth continues to see the impact of the macro auto environment, we are seeing solid uptake of our streaming-only subscriptions,” Witz said, telling analysts that the streaming-only subscribers have become a “meaningful driver” of subscriber growth this year.
SiriusXM is also continuing its push into the connected TV market During the second quarter, it added deals that will allow it to reach viewers of Amazon Fire, Android TV, LG, and Roku. It also signed an agreement with Comcast that includes launching a fully integrated SiriusXM audio experience to millions of Comcast customers on the Xfinity platform later this year. The app will also support video, suggesting more than just an audio play is in the cards.
“All of these initiatives create new ways to reach and engage consumers, both those who already have a satellite subscription in their cars and those who may be new to the service,” Witz said.
In addition to opening new programming doors, including the creation of branded channels, Chief Content Officer Scott Greenstein said digital has also helped SiriusXM reach new demos. “The digital area is where the younger demo growth will come,” he predicted.
One clue to how listeners may be responding to the digital media comes from data Witz shared about the company’s partnership with Drake. SiriusXM created the Sound 42 channel last year featuring cutting-edge hip-hop and R&B. It has also been available as an online channel. When Drake dropped a new album last month, Witz said total daily listeners and time spent listening to Sound 42 online jumped 50%. She did not offer any specific figures but said the streaming numbers illustrate how SiriusXM’s holistic approach across both in-car and streaming listening.
Why Pandora May Matter More Than Ever
For the time being, Pandora remains SiriusXM’s largest entry into the digital audio space. But what once was the dominant streaming music option has lost much of its luster – and users – in recent years. The podcast and music app’s monthly active users totaled 50.5 million during the second quarter, down eight percent from a year ago. And Pandora’s ad-supported listener hours were 2.84 billion in the second quarter, down from 3.03 billion last year. Self-pay subscribers to the Pandora Plus and Pandora Premium services decreased modestly in the second quarter to 6.3 million. There was one bright spot, however. Average monthly hours per ad-supported user climbed 3% to 21.1 hours during Q2 compared to 20.4 last year.
But what Pandora is doing is helping SiriusXM translate its digital reach into a blossoming ad business. The unification of ad inventory under SXM Media has given SiriusXM a total reach of 150 million Americans across its portfolio, and that reach combined with new technology like the artificial intelligence-powered podcast audience targeting tool released earlier this month will be key to continued growth according to Witz.
“We remain committed to our long-term focus of shaping the future of audio and broadening our revenue base into the non-automotive market,” she said. “Ultimately, this translates into solid revenue growth, margin expansion, and strong cash flow generation, which can be reinvested in the business to create better products for our customers.” The company says its non-satellite radio ad sales totaled $119 million during the second quarter, up 50% from a year ago.
Witz thinks technology will help grow that number even more.
“I would expect monetization in podcasting to grow faster than the audience listening is growing just because we're still working with a largely manual process. There are a lot of host-read ads. There's a lot of working closely with the talent,” she said. “Programmatic is in its early stages. So, there's a lot of technology and capabilities that are going to come to the space to enable us to grow going forward.”