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Radiodays Europe in Barcelona, March 2012 Session about: "Going for a digital future"
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3
The world in which radio competes is changing
•Media consumption habits are shifting
-especially younger listeners
•Greater competition for advertising revenues
•Analogue radio has limited ability to innovate
Digital music services with power to disrupt
4 Note: (1) French-speaking part
Sweden: planning
for DAB+
Denmark: 34%
have digital radio
Germany: DAB+
launch 2011
Norway: DSO
planned for 2017
UK: 40% have
digital radio
NL: planned
migration to DAB+
Belgium1: creating
DAB+ strategy
Switzerland: 25%
have digital radioFrance: by end 2012,
10 cities DAB+
Across Europe, the footprint of digital radio is expanding
5
Consumer Automotive
Benefits of experience
• Over 20% of listening is in-vehicle
• New cars: in UK, digital as standard
-Q4 2011, 21% of all new cars
-by 2015, 75-85%
• Other countries following, e.g. Toyota
Lexus in Australia
• Aftermarket solutions being developed
and refined
• Device prices falling
-Chip prices falling
-Economies of scale
-Jan 2013, DAB royalty ends
Newer territories can benefit from the experiences of other markets
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Sound &
ease of useChoice
Additional
functionality
Consumer
benefits
• Lack of interference
• Clear, consistent
sound
• Easy tuning
• Scrolling text / info
• Visuals
• Pause / rewind / record
• Detailed traffic info
• EPG
• Interactivity (smart radio)
• Extra stations
• Specialist stations
(e.g. live sport)
• Pop-up / event
stations
Listener benefits can be classed in three areas
8
Sydney analogue services Sydney digital services
17 services on AM and FM 40+ on DAB+
Digital radio offers listeners significantly greater choice
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• Exclusive live rights to
German football
• Up to 5 matches
simultaneously
Germany Australia Hong Kong
• Comedy radio station • Digital Money
-business news / stock
market reports
-horse racing
Providing a range of new speech-based services…
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UK Australia Germany
Electronic music
ClassicalJazz Country
Unsigned bandsClassic Rock
… and music services designed for the tastes of specific audiences
11
Existing radio groups can retain share on digital radio
Share of listening by platform, %
Note: (1) includes analogue services broadcast on digital-only outside their analogue licence area
Source: RAJAR, PH analysis
98%83%
66%
19%
15%14%
3%2%
UK AM / FM UK DAB UK online
AM / FM services (simulcasts) Incumbent digital-only
New entrants and others
1
12
Geographic
coverageDevelop portfolio
Deepen user
experience
Strategic options
• Extend beyond
analogue licence area
• Value add through
-Text
-Visuals
- Interactivity
• Analogue stations in
digital quality
• Niche and temporary
stations
• Cross-promotion
How can digital radio build value for commercial broadcasters?
21 3
13
First, digital radio can enable broadcasters to extend their geographic coverage – potential to create national brands
XFM – UK coverage
•XFM on FM in London and
Manchester
-14m population
•XFM on DAB in many regions
-40m population
•Listening up by 22%
FM and DAB
DAB-only
14
Analogue and digital Digital-only services
Second, broadcasters can use digital to extend their brand portfolio
15
Absolute Radio, weekly listening hours, m
11.4 11.3 11.1 11.6 11.6
1.2 2.04.4
12.6 13.3
15.5
19.020.3
8.77.4
Q4 09 Q2 10 Q4 10 Q2 11 Q4 11
Absolute Radio (core service) Absolute digital-only services
Source: RAJAR; four quarter moving average
Classic Rock
and Extreme
80s replaces
Extreme
Launch of 90s
Launch of 00s
+60%
New digital-only services have increased Absolute’s listening hours by 60% in two years
16
Third, broadcasters can enhance the user experience – for example through colour screens
• Top-end devices typically over
€150
• This year, in Germany, new colour
screen devices will be available
-expected prices from ~€100
Revo Axis
(launched 2009)
Pure Sensia
(launched 2009)
17
Stations in UK, Germany and Australia use colour images to provide information and cross-promote services
18
Smart radio
(connected)
New song
Advertising
Listen later
Looking ahead, smart radio (broadcast and IP) will provide new listener benefits - and create new revenue opportunities
2
1
3
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New song – no longer a passive relationship
•Hear new song on radio
•Use IP to
-access info
-add to playlist
-share with friends
20
•Listening to programme
is interrupted
•Tag and listen later
-same or different device
Listen later – on any connected device
21
•Hear ad on radio / see
visual display
•Use IP to
-access more information
-register interest
Hybrid radio gives access to online and mobile marketing budgets
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Collaboration between various industry groups, government and regulators is essential
Policy and
regulation
Broadcasters
& stakeholder
body
Network
operators
Broad-
casters
Consumer
devicesCars Retail Consumers
25
5.6
6.7
5.4
6.7
8.6
9.2
5.75.8
Q4 09 Q1 10 Q2 10 Q3 10 Q4 10 Q1 11 Q2 11 Q3 11
Radio 4
ExtraRadio 7
Radio 7 / Radio 4 Extra weekly listening hours, m
The BBC has also seen significant benefits from co-branding, cross-promotion & smart scheduling
Note: rebranding coincided with increase in cross-promotion and greater emphasis on complementary scheduling
Source: RAJAR
37%
increase
Service rebranded1
April 2011
