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siriusxmlong known as a commercial option for in-car radio, audio entertainment companies have bet on advertising to drive its business.
On Tuesday, the company launched its first ad support subscription plan for car listening, known as the SiriusXM Play. This is a cheaper option than long-standing products, and costs less than $7 a month for in-car and streaming. According to the company, there is a limited set of commercials in a subset of music, sports, news and talk show offerings.
SiriusXM posts advertising in the same way as traditional TV and streaming space media counterparts to drive revenue and profits and retain customers. Especially as competition is growing with other audio options, SiriusXM bets that cheaper, ad-supported options will help convert more in-car free trial consumers to long-term customers.
Currently, the option will be available on a limited basis, but SiriusXM hopes to make the package available on roughly 100 million vehicles by the end of 2025. Details on plans and package pricing will be available later this year.
SiriusXM Play subscribers initially have access to over 130 music and talk channels, but additional channels will be added over time, the company said.
Popular talk radio host Howard Stern, Live Sports Play by Play and certain artist-driven music channels remain exclusive to ad-free customers in the car. SiriusXM offers a variety of commercially unavailable packages ranging from $9.99 to $24.98 per month.
SiriusXM is known for its in-car service, but it also owns Pandora, another music streaming service that offers streaming apps and has its own ad support plan.
Bring the ads
SiriusXM CEO Jennifer Witz will speak on stage during the SiriusXM Next Generation at Shed’s Tisch Skylights on November 8, 2023 in New York City.
Brian Bedder | Getty Images
SiriusXM has already identified one major target audience for ad-supported tiers. A driver who recently bought a car and won’t renew the SiriusXM service after the free trial expired, told CNBC.
Consideration of advertising for SiriusXM’s in-vehicle business “has been there for quite some time,” Chief Operating Officer Wayne Thorsen said in an interview.
The company has been experimenting with SiriusXM ads and in 2024 began offering a free, ad-supported version with limited content for selecting a vehicle. Thorsen said this is similar to the free tier on Spotify, and is being used as a way to cancel the free trial and get back customers who push to upgraded paid plans.
The new ad-supported plan launched on Tuesday is a different experience from both this and the main ad-free SiriusXM experience, and we don’t expect the majority of users to switch.
“There are a lot of people who don’t convert when they’re in our trial funnel. They like the service and the prices come in,” he said.
The length of SiriusXM free in-car exams varies, with the majority spanning three months.
“What does this mean (with SiriusXM)? I think the example I use is probably Netflix. It was a very similar dilemma,” Thorsen said.
For years, Netflix has balked to add commercials to its streaming service.
“They found themselves at least domestically, by slowing growth, at least in the US. They had to find a way to embrace something a little more price-sensitive,” Thorsen said.
Netflix Also, SiriusXM already has many subscribers. This is a natural growth limiter. Netflix has stopped focusing on profitability and other metrics by reporting quarterly subscriber growth. Its stock price hit when the company reported losses in 2022. However, Netflix’s shares have skyrocketed since introducing ad-supported plans and password sharing crackdowns.
Meanwhile, SiriusXM is also facing competitive pressure. That is, there is the rise of technology that allows consumers to stream other services in their cars. Spotify and apple music. The company has owned Pandora since 2019, but has recently focused on building SiriusXM streaming-only apps.
Promote profits
Faced with these challenges, SiriusXM is leaning on CEO Jennifer Witz, leading the way, leaning on what it has long thought of its strength, the position of the car.
A few months since it was split from John Malone’s Liberty Media Empire, SiriusXM announced its latest strategic plan in December, focusing on the in-car radio business and a new focus on advertising. He also announced Thorsen as COO, providing fresh financial goals for investors.
SiriusXM said it will move marketing and other resources away from what is called “high-cost” audiences, which often focus or obsolete subscription plans “to concentrate resources on core revenue-generating segments.” In-car subscriptions make up 90% of our customer base.
“We took part in this year with a very clear focus on what we are doing our best. It offers core audience segments with unparalleled distribution in cars and very unique content focusing on live, exclusive, human-curielle content,” he told the investor meeting in May. “I’m sure we’re on the right path.”
SiriusXM ended the first quarter with a total of 33 million subscribers, with a decline of 303,000 subscribers over the period. SiriusXM’s total profit was $937 million, down 6% from the previous year, and the total margin was 59%, 1% lower than the previous year.
Total, SiriusXM reported net profit of $2.07 billion in quarterly revenue for the most recent quarter, down 4% from the previous year, and between $241 million and $204 million. The results include Pandora and other businesses outside of platforms. The company’s next revenue report will be issued on July 31st.
Advertising revenue is already playing a role in the business. SiriusXM had a total AD revenue of approximately $1.8 billion in 2024. In May, it reported AD revenue of $394 million in the most recent quarter. This was partially offset by the growing podcast business.
Still, the introduction of ad-supported subscription plans is a weakness in the advertising market.
The traditional media advertising market has been soft in recent years, particularly due to macroeconomic challenges. This was amplified this year by President Donald Trump’s trade policy, which put the costs of business in question.
SiriusXM’s Chief Advertising Revenue Officer Scott Walker calls the current advertising environment “unpredictable.”
“Our business is robbing and flowing through the macro environment. There are certainly many businesses that are disrupted by tariff noise, especially those with overseas supply chains,” Walker said.
