WorldSpace Satellite Radio: Fading Signals?
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Case Code : BSTR239
Case Length : 22 Pages
Period : 1990-2006
Organization : WorldSpace Corporation
Pub Date : 2006
Teaching Note : Available
Countries : The US, India, Africa
Themes: Corporate Strategy
Industry : Media,
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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.
A Slow Start
In the initial years, WorldSpace did not have a clearly
articulated business model as the satellite radio business was still in its
infancy. When the company's services were launched, its revenues had come only
from receiver sales and from the fees it received from leasing out satellite
space to individual channels. All the channels were offered free of cost to
those who bought the receivers...
Launch of A Subscription-Based Model
After its losses in 2003-2004, WorldSpace introduced a subscription-based model
in all its markets in a bid to improve its business. The prices of receivers
were reduced and yearly subscriptions were introduced.
When this scheme also did not bring in the expected number of subscriptions,
WorldSpace introduced special offers to increase subscriptions.
For instance, in
2005, it launched a festival offer in India by reducing the entry price for the
service and offering quarterly subscription packages. The company also tried to
attract subscriptions by providing exclusive Indian channels via AsiaStar...
WorldSpace in Africa
One of Samara's initial objectives in launching WorldSpace was to spread
awareness about AIDS and provide information on other developmental issues in
the developing regions of the world. In his view, many African countries were
deprived of important information as they lacked the infrastructure to receive
and disseminate such information. According to him, a service like WorldSpace
could deliver this information to empower people, particularly in the poorer
areas of Africa...
WorldSpace in India
India was believed to be a market with great potential for WorldSpace,
not only because of the large radio audience in the country, but also
because the Indian Government had opened up FM broadcasting to private
players in 2000.
Until then FM, along with the AM channels, had been
broadcast exclusively by the government-owned All India Radio (AIR).
Despite the potential competition from local FM channels, the opening up
of the market was said to have created opportunities for global players
The Strategy Change
In August 2005, WorldSpace India decided to lower the initial cost of subscribing to the service.
This included reducing the cost of receivers from about Rs.5,500 to Rs.1,999, inclusive of the subscription
fees for three months. This drop in price led to spurt in subscriptions...