The market for satellite radio will follow a similar growth trajectory in Canada as cellphones, high-speed Internet and some other consumer technologies, a new report says.
The report, by communications consultancy Yankee Group, says that means the Canadian market for satellite radio should reach one million subscribers by late 2008 -- three years from the recent launch by the two leading providers -- and 3.5 million users in nine years. It is estimated that sales will reach 80,000 by the end of this year.
Analysts said Yankee Group's forecast, if accurate, would be enough to support a healthy industry in Canada. "When you give Canadians greater choice in entertainment content, history has shown they'll adopt it," said Jeff Leiper, an Ottawa-based analyst for Yankee Group.
The consultancy's report is believed to be the first independent forecast on Canada's blossoming satellite radio industry.
The two key players in the market, Sirius Canada Inc. and Canadian Satellite Radio Inc., received licences in June from the federal broadcast regulator to offer separate clusters of stations beginning late this year. Both moved quickly to have their service available in time for the lucrative Christmas shopping season.
Mr. Leiper said adoption rates for satellite radio should be faster in Canada than when services first appeared in the United States. "Canadians have less choice on the dial."
The group's forecast was based on the growth of other consumer technologies in Canada, existing estimates on the "grey" market, and the experience of satellite radio in the United States, where it has been available for a few years.
Iain Grant, managing director of SeaBoard Group, a telecom consulting firm in Montreal, said he thinks that forecast may be overly rosy. "There are still some hurdles. We are not used to paying monthly subscription fees for radio."
Despite that, Mr. Grant said satellite radio should be a business success in Canada because the two leading companies are using technology that is already in place for the U.S. market. That means the additional costs are minimal, he said.
Both CSR and Sirius -- each of which has a U.S. partner and relies on existing hardware -- are offering dozens of new stations to the Canadian market, including a much smaller number of domestic content stations. Service fees are between $12.99 and $14.99 per month while the necessary hardware costs as little as $100.
The two companies have also been in a battle to land popular programming, including sports, news and comedy.
Mr. Leiper said he suggests the two Canadian operations spend more on advertising because the market is new and many consumers aren't familiar with the product.
