At the Reuters Media Summit in New York City last week, Sirius' CEO Mel Karmazin told attendees that the satellite radio company expects to offer a live television service in vehicles by the end of next year. Likely to be available in 2008 car models, the exec said deals with content providers could be set by as early as January for the service geared toward young viewers in the back seat.
"We have three content deals that are very close to being finalized. I don't know if they will be done by CES, but that is what we are shooting for," he said. "We will have video in the rear seat of the car up and running."
While the comments aren't completely new - the company said in 2004 it would offer video by mid-2005, Oppenheimer's Thomas Eagan said they are "intriguing" because Sirius could cost-effectively improve its financial and operational wellbeing with a video service.
Sirius could launch a video service with its existing satellite and repeater infrastructure without reducing its audio content, the analyst said, but consumers would need new or different handsets/in-car receivers to get the signal. Eagan said the video product would consist of three or more children's channels (i.e. Nickelodeon, Disney and HBO Family) with a DVR downloading service sometime down the line.
"We don't expect significant difficulties integrating a video service into OEM assembly as many of Sirius' auto partners, such as Ford and Chrysler are already assembling SUVs with drop down LCD screens," Eagan said. "The size of the video market is clearly smaller than the audio market (and) without significant costs we expect the higher OEM conversion rate and higher ARPU would be accretive."
In other related news, XM Satellite Radio said American Honda Motors will factory-install the XM service in more than 650,000 of its 2007 model year vehicles. Honda was one of the company's original strategic partners introducing its first factory-installed XM vehicles in 2003.
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