XM Canada started trading today in Toronto but got off to an inauspicious start by closing below its $16 offering price. For an IPO that was over-subscribed, it's difficult to tell why it didn't perform better out of the gate. Perhaps there is still some doubt among investors about how well satellite-radio will do in Canada. Just because nearly 8 million people subscribe to the service in the U.S. doesn't mean it will be as successful north of the border. Canadians tend to be more price-sensitive and it may take some time before they start to believe that paying $12.95 for 100 channels of commercial-free radio is worth it. I mean, this is a country that has gone crazy for buck-a-beer and believes Tim Horton's makes as good a cup of java as Starbucks. In comparing the Canada with the U.S., I would also suggest commuters don't drive as long as many U.S. cities where suburbia is alive and well. Canada is also fortunate to have a popular and well-financed public broadcasters - CBC - that provides several channels of commercial-free radio already. And Canada doesn't have Clear Channel dominating the market, which means the market isn't as homogenous. Does this mean satellite-radio is doomed to make, at best, mediocre inroads in Canada? Maybe but I think it will just take longer for the market to gain momentum. In the short-term, Canadians are going to do a lot of browsing and radio-kicking before they jump into the service. But over time, I think a lot of people will climb onboard - lured by relatively low prices for service and hardware and the reality there is life in commercial-free radio beyond the CBC. If this scenario materializes, XM's disappointing first-day stock performance could offer a good buying opportunity.
|
||||||
|
Mark Evansthe blog - examines the world of telecom and technology from a distinctly Canadian perspective.the person - lives in Toronto, CA with his wife and three children, and works as director of community with PlanetEye Inc. 
|
Will Satellite-Radio Work in Canada?
by
Mark Evans
on Mon 12 Dec 2005 03:46 PM EST | Permanent Link
XM Canada started trading today in Toronto but got off to an inauspicious start by closing below its $16 offering price. For an IPO that was over-subscribed, it's difficult to tell why it didn't perform better out of the gate. Perhaps there is still some doubt among investors about how well satellite-radio will do in Canada. Just because nearly 8 million people subscribe to the service in the U.S. doesn't mean it will be as successful north of the border. Canadians tend to be more price-sensitive and it may take some time before they start to believe that paying $12.95 for 100 channels of commercial-free radio is worth it. I mean, this is a country that has gone crazy for buck-a-beer and believes Tim Horton's makes as good a cup of java as Starbucks. In comparing the Canada with the U.S., I would also suggest commuters don't drive as long as many U.S. cities where suburbia is alive and well. Canada is also fortunate to have a popular and well-financed public broadcasters - CBC - that provides several channels of commercial-free radio already. And Canada doesn't have Clear Channel dominating the market, which means the market isn't as homogenous. Does this mean satellite-radio is doomed to make, at best, mediocre inroads in Canada? Maybe but I think it will just take longer for the market to gain momentum. In the short-term, Canadians are going to do a lot of browsing and radio-kicking before they jump into the service. But over time, I think a lot of people will climb onboard - lured by relatively low prices for service and hardware and the reality there is life in commercial-free radio beyond the CBC. If this scenario materializes, XM's disappointing first-day stock performance could offer a good buying opportunity.Comments
Re: Will Satellite-Radio Work in Canada?
by
Anonymous
on Mon 12 Dec 2005 08:47 PM EST | Permanent Link
I was having this same conversation today with a friend at one of the TV networks. Aren't we moving toward a media world that is stressing on-demand, portability, time-shifting and customization? I can't figure out the appeal of satellite radio. I already get a bunch of stuff for free with commercials or commercial-free with my tax dollars. I love music, but the stuff I like rarely gets played on the radio anyway. I get that it's a nifty gadget and there are sure to be plenty bought for Christmas, but if Santa is reading this, I'll take the Video Ipod as a first option.
I also heard that Sirius is outselling XM at retail...do you think subscribers are unaware that they won't be getting Sirius's top salesman (Stern) in Canada? Re: Re: Will Satellite-Radio Work in Canada?
by
Mark Evans
on Tue 13 Dec 2005 10:29 AM EST | Profile | Permanent Link
it will be interesting to see CSR's subscriber numbers when it posts its first quarterly results. it should provide a pretty good indication about satellite radio's reception in canada.
Re: Will Satellite-Radio Work in Canada?
by
blogger_brent
on Tue 13 Dec 2005 01:21 PM EST | Profile | Permanent Link
Here's a biased POV as I have been a grey market XM subscriber since early 2002. Are there enough versions of me in Canada to make this satellite thing fly? If it does, here are the reasons why it will work:
1) The major met areas of Canad have increasing traffic snarls and local radio makes my ears bleed after 10 minutes. If XM follows the US example, it will have major met area traffic and weather on one of the channels soon. So, no need for local radio IMHO. Local radio is still there if you want it, but I find myself listening to the Canucks on XM rather than the local radio sometimes. 2) The same naysayers said cable TV would never work becasue the signals off the air in the early 70's were free. Cable TV had faster penetration in Canada than the US and today has nearly as many homes passed as wired telephone. People will pay for more choice if the price point is not noticeable and I think $12.99 a month is OK. 3) The quality is awesome. With proper repeaters set up in the downtown core the sound is great, much better than FM stereo and digital radio requires an upgrade of your car radio, so don't go there. 4) The first time you drive to Muskoka and listen to your favourite channel(s) all the way to the cottage, remove the Delphi Sky Fi 2 from its car holster and plug it in to your crummy little cottage stereo, you will understand. No fade-outs, no limited range of conventional radio and all the news and sports that fits for your lazy cottage afternoon or your wild dance party that evening. Try it. Driving the Coquihalla to Kelowna with XM the first time was an epiphany. Re: Re: Will Satellite-Radio Work in Canada?
by
Mark Evans
on Tue 13 Dec 2005 03:01 PM EST | Profile | Permanent Link
brent,
good points. i think it will take some time before canadians catch on to the reality that 100 channels of commercial-free radio is worth the $12.92 a month fee. maybe, it will be the cottage/commuting crowd that will climb onboard first before word or mouth starts to work. mark Re: Will Satellite-Radio Work in Canada?
by
Anonymous
on Tue 13 Dec 2005 04:24 PM EST | Permanent Link
Why will canadians pay so much then can just subscribe to the US version. Its the same channels with some extra channels at the same price. Grey market is the way to go. |
My blog has moved.
Check out the new Mark Evans. It's part of my mini-blog empire that also includes All About Nortel and Twitterrati. You can subscribe to Mark Evans Tech by clicking on the RSS symbol above.
Check Out These Blogs
Search
Login
|
||||
|
||||||