While we do know that Netflix has been growing net subscribers at an impressive rate, we don't know how the company has performed in terms of cancellations or what the subscription industry calls "churn." For Sirius, though, over the past three year or so, churn has remained stable at 1.99% to 2%. This quarter, however, churn was down to 1.97%.
Although it looks like a small number, don't be quick to discount how important this slight improvement in churn really is. It can mean as much as one million additional subscribers during the full-year. It also means that Sirius is becoming more "sticky" with its users and subscribers are demonstrating incredible brand loyalty.
Sirius is known for aggressively reducing rates to maintain its subscriber count. Management figured out a way to meet conservative expense control with strategic growth initiatives such as the telematics platform, which I wrote about recently. It's still too early to proclaim telematics a bread-winner. But it's clearly not a money-loser.
In the meantime, I don't believe that there should be any further questions about Sirius' business model. The company continues to do the impossible -- grow despite stiff competition from Pandora (P), Spotify and now Apple, which is planning to enter the automobile dashboard at the beginning to 2014. The bears, however, have proven to be incredibly patient. At some point one side will win. So far in 2013, the victor is clearly Sirius.At the time of publication, the author held shares of Apple. Follow @saintssense This article was written by an independent contributor, separate from TheStreet's regular news coverage.
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