Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Technology Stocks : XM Satellite Radio Holdings Inc. (XMSR) -- Ignore unavailable to you. Want to Upgrade?

To: DaveMG who wrote (2235)	2/17/2006 5:31:46 PM
From: i-node	Respond to of 3386

Absolutely. Just like anything else, the more you grow, the tougher it is to maintain the growth rate. But presumably, the cost to acquire a subscriber will have dropped radically by then, as well -- cheaper equipment, minimal subsidies, etc. Churn isn't a problem if you don't pay much for the sub to begin with and as long as there is a steady stream of new guys coming in. XM HAS done some things to mitigate it going forward. The data services, for example, which are just getting started (20K subs at an ARPU of $34). Other services, such as Navtraffic, integrated weather systems, etc., and ad revenue, all provide a boost to make it all worthwhile. The ad revenue, in particular, is being overlooked -- but when you get 10M or 20M subs, it becomes significant if you're getting half the revenue off of the Oprah channel (or Howard channel).

To: DaveMG who wrote (2235)	2/17/2006 6:04:25 PM
From: pcstel	Respond to of 3386

And the greater the number of subs the bigger the problem.So they have to significantly reduce churn and acquisition costs.. Exactly. Biggest way to combat acquisition costs to require a one or two year contract. A $150 dollar early termination fee should do it. But, that might reduce growth. If you have 1.8 Million real subscribers, on top of the trial subscribers at 48% of those added leaving. Your growth is going to level off real fast. Or you could raise the subscription price to lets say $20 a month. But, that will also increase CHURN and decrease Growth rates. Since I have watched XM. The reported CHURN rate has gone for around 1.1% to 1.5%. Doesn't sound like much, but in reality. It is HUGE! CHURN KILLS!