• by David Kaplan , January 6, 2005

In what seems to be the growing convergence between media forms such as radio and television and wireless communications, Sirius Satellite Radio is teaming up with Microsoft to develop video service that seeks to target car buyers in particular.

Sirius hopes to offer a video service by the latter half of 2006, and expects to devote two to three channels of premium video content designed primarily for children. The company cited the explosive growth of DVD sales, along with the popularity of video capabilities in automobiles that are becoming a prime feature for families and travelers.

Sirius and its direct competitor XM Satellite Radio have signed a number of deals with carmakers involving the offer of the satellite radio as an option for new models.

Sirius announced its intentions at the Consumer Electronics Show in Las Vegas on Tuesday. So far, the company has selected Windows Media Video 9 for use in Sirius' mobile video platform, and has reached an agreement with Microsoft to collaborate in the further development of video applications. "You're going to see more announcements like this," according to Tim Hanlon, senior vice president and director of emerging contacts at Starcom MediaVest Group. "This is yet another indication of the erasure of the line between media points such as radio and television and the Internet. This effectively co-mingles delivery of media and changes what consumers will think of as a video-offering or an audio offering."

Hanlon pointed to other companies, such as iBiquity Digital, which owns the copyright to "HD radio," as helping to fulfill the promise of combining all sorts of media in one package. In fact, earlier in the day at the Las Vegas conference, iBiquity announced that 21 of the nation's top radio broadcast groups agreed to convert their roughly 2,000 AM and FM stations to digital HD Radio technology. Some of the broadcast groups who signed on include ABC Radio, Clear Channel Communications, Cox Radio, Emmis Communications, and Viacom's Infinity Broadcasting.

The one wild card in all of this is whether consumers will be willing to pay for such services. On the flip side of that card is the question of whether advertisers will support these new mediums, which often come with the promise of ad-avoidance on the part of greater consumer control.

"I think cable has answered that question to some extent, in that you're likely to have a mixture of commercial and non- or minimal commercial-backed offerings," Hanlon said. "Consumers may in some cases pay extra so they don't have to be exposed to much advertising. But monthly fee after monthly fee, people will generally opt for the lower cost if it's supported by advertising. Still, this is not going to be the realm of the 30-second spot. It's going to require new ad vehicles."