Sirius XM‘s current all-stock $3.5-billion buy of this music-streaming support Pandora increased a great deal of eyebrows. A major issue was why Sirius paid much. Is Pandora’s music library and client base actually worth that sum? The solution is that this is a tactical move by Sirius at a battle that’s much larger than radio. The actual battle, which is becoming a lot more visible in the next several years, is more than the driving experience.
People today spend a good deal of time commuting in their automobiles. This time is fixed and will not likely change. But what’s changing is how we drive. We are already seeing several new cars with motorist support characteristics, and automakers (and technology firms ) are working hard to attract completely autonomous automobiles into the industry as swiftly as possible. New cars now already contain a mean of 100 million lines of code which may be upgraded to boost motorist assist choices, and a few automakers such as Tesla offer an”autonomous” style on highways.
As stated by the Brookings Institute, one-quarter of cars will be autonomous from 2040 and IHS forecasts all automobiles will soon be autonomous after 2050. These are conservative estimates, as we’re very likely to see big changes in another 10 decades.
These changes will affect the driving experience. As automobiles become more autonomous, we could do more than just listen to podcasts or music. We might have the ability to watch movies, browse the internet and much more. The worth of automobile property is already precious, but it is likely to skyrocket because we alter how people consume media while driving.
The Pandora acquisition was a strategic move by Sirius to achieve the crucial assets so it will not fall behind in this area — and also to enter the fast-paced music streaming company, where consumers have music in the home, work and in play. Even though Pandora’s music library is possibly next grade, in addition, it is good enough it may provide pretty much every celebrity many men and women want. This can be how expensive mergers occur — a single party is worried about falling and pays a premium to buy the other firm’s assets. Additionally, it is a wager by Sirius concerning the driving experience of their future.
As the conflict over the driving experience heats up, we’ll initially see businesses such as Google, Amazon and Apple start dipping their toes on the marketplace. They might do this via investments in startups, rolling their own solutions, or buying competitions. A few of those massive tech firms already have jobs around autonomous automobiles. Uber might even be interested in the marketplace.
For the time being, Sirius likely does not need to be worried about competition from startups. They will not have the ability to grow large enough quickly enough to receive a large share of this marketplace. A more probable situation is that startups will operate on applications that delivers an exceptional performance, which makes it an attractive acquisition target by a bigger firm.
This will be an interesting battle to watch in the next few years, as automobiles basically become applications using four wheels attached. Firms like Sirius know that this is a significant space and the battle within the driving experience is going to be won in applications. The purchase of Pandora is just the start.