SiriusXM Sees Revenue per Subscriber Decline as Mix Shifts to Streaming-Only

The rise in demand for music streaming comes with its drawbacks for broadcasting companies that are used to offering a more diversified suite of listening options, as SiriusXM noted, following the launch of its new streaming app.

The radio company shared in its fourth-quarter and full-year 2023 earnings report Thursday (Feb. 1) that revenue declined slightly from the year before, with average revenue per user (ARPU) falling slightly.

“The challenge to 2024 revenue comes from roughly level subscriber numbers and a modestly softer ARPU, partially from a more diverse subscriber base with more streaming-only subscriptions,” CEO Jennifer Witz told analysts on a conference call.

In November, the company launched its new streaming app in a bid to secure the loyalty of younger consumers. On Thursday’s call, Witz said while these subscribers yield lower revenue than those enrolled in other plans, they will not detract from in-car subscriptions’ user bases, since streaming subscribers typically are not listening in their vehicles.

“We are really excited about the $9.99 price point on our streaming-only plan and believe that it enables us to really address a broader market,” Witz said. “… We’re only about seven weeks in, but we’re very excited about … the streaming product … and the product market fit it provides these growth audiences.”

Across the broadcasting industry, companies are turning to streaming subscription models. In November, for instance, British broadcasting giant the BBC launched its BBC Podcasts Premium offering in 166 additional countries.

Plus, it was reported Jan. 22 that internet radio and podcast giant Audacy, as part of its strategies to bounce back from its Chapter 11 bankruptcy filing earlier this month, plans to debut a subscription streaming platform that the company estimates could bring in up to $20 million in revenue by 2027.

Many consumers are feeling the strain that streaming subscriptions are putting on their monthly budgets, according to the PYMNTS Intelligence report “The One-Stop Bill Pay Playbook: Drivers of Consumers’ Bill Payment Priorities.”

The study, which drew from a survey of more than 2,100 U.S. consumers, revealed that when people are unable to pay all their bills, streaming subscriptions are the most likely to get canceled. Fifty-five percent of consumers said they would cancel these services, a greater share than said the same of any other monthly bill, while 17% would prioritize paying this bill in full over others.

Still, key players are seeing growth across forms of streaming media. For example, Spotify reported subscriber growth in its most recent earnings release. Netflix saw its subscriber base rise by 13 million year over year last quarter. Peacock saw a nearly 50% increase in paid subscribers compared to the prior year period.

With SiriusXM facing its challenges with declining ARPU due to the shift toward streaming-only subscriptions, the broadcasting industry is going through a transformative phase. As traditional models adapt and streaming platforms innovate, the future of media consumption remains dynamic, with companies strategically navigating the balance between profitability and meeting evolving consumer preferences.