WorldSpace Satellite Radio: Fading Signals?

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Case Details:

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, Entertainment, and Gaming

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Please note:

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.

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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 like WorldSpace...

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...

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