Moving to digital

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The DAB radio market appears troubled despite almost universal coverage and a wide choice of innovative products on the market. George Cole diagnoses the problem.

Is the DAB glass half empty or half full? The answer could well depend on how you view the latest market statistics. Figures from the radio research organisation Rajar reveal that cumulative DAB radio sales reached 14 million units at December 2011, with DAB accounting for 19.4% of radio listening in Q4 2011, up from 15.8% the previous year.

Some 40% of adults have a DAB radio at home. Industry body Digital Radio UK (DRUK) says entry level DAB radios now cost around £20 and that there are 168 DAB station brands, 25 of them national. DAB coverage now includes 93% of the population for BBC national services, and 85% for commercial national services, with the BBC aiming to reach 97% coverage by the end of 2015.

So far, so good, but even the biggest DAB supporter would admit that DAB sales have not been as fast as was hoped, and that the 28.2% take-up figure for digital listening platforms (DAB, internet, digital TV), means there’s some way to go before the target figure of 50% is reached, which is expected to trigger a government decision to switch from analogue to digital radio.

A broad offer

One thing is certain: a lack of DAB product is not the cause of the slower than anticipated growth, and DAB manufacturers have launched many new and innovative products, designed to appeal to a wide range of ages and interests. Pure’s Highway 300Di is a new in-car digital radio adapter, and the company’s Contour 100Di, a digital radio dock with internet radio and music streaming app. Pure’s forthcoming Sensia 200D Connect is a wireless music system with a colour touch-screen and USB recording. Roberts Radio’s Record R records DAB and FM radio onto an SD card, and includes a pause /rewind feature. Sony’s CMT-CX5BiP is a wall mountable sound system with   iPod/iPhone playback and DAB.

Just before Christmas, the BBC and DRUK launched a £10 million campaign to drive digital radio listening. Owen Watters, deputy chief executive at Roberts, says, “The on-air trails are hard hitting and do a great job of capturing the imagination. We are aware that the campaign will continue longer term (over two years) and are delighted that digital radio will benefit from continued support and exposure.” For Colin Crawford, director of marketing at Pure, “The key point about the recent BBC/DRUK DAB campaign is that it delivers a consistent message across almost all broadcasters, and this is a positive step as we need to see consistent and sustained promotion across the industry as a whole.”

The certification scheme

But some DAB developments have stalled. A cost-benefit analysis on digital radio, conducted by the Department for Culture, Media & Sport, was expected to be published at the end of 2011, and is now likely to be a year late. A DAB radio certification scheme, designed to help consumers choose DAB products offering a minimum specification, looks set to be launched towards the end of the year. But Roger Darlington, chair of the Digital Consumer Expert Group, says, “Minimum technical specifications are more or less agreed, but we are nowhere near establishing robust testing and approval processes. Indeed, set manufacturers fear that the testing regime will be so onerous and costly that they will not be willing to be part of such a scheme.” 

Peter Hainsworth, Sony’s sound category development manager, says, “We fully support any scheme, however it is essential that it’s implemented in such a way that it doesn’t hinder the development of products.” Colin Crawford says, “The digital tick was used successfully for digital TV switchover, and should deliver similar benefits for the whole industry if used for the digital radio switchover. All our products go through a substantial suite of tests, so while we hope the scope of any additional testing will be manageable; we don’t see an additional test making a substantial difference.”

Around 20% of radio listening is done in-car, and some 33 million vehicles have analogue radios, so it’s vital that DAB finds its way into them. Roger Darlington notes that, “Motor manufacturers have agreed that by the end of 2013 all new cars will have digital radios as standard, but the problem is converting the huge existing population of vehicles fitted with analogue radios. There are conversion kits, but they are still quite expensive and not easy to fit. It is difficult to see most car owners voluntarily retro-fitting digital radios to their vehicles for many years.”

The issue of content

Roger Darlington adds that the DAB industry needs to offer more compelling content, improved coverage and improved functionality on DAB radios, in order to accelerate the take-up of digital radio. Owen Watters says, “Improved coverage is vital, as DAB needs to have greater audience figures in order for the switchover to happen.  Continued innovation in DAB technology will encourage people to migrate from FM to DAB, and more convergence products offering streaming and iPod docking will encourage trade-up.” He adds that broadcasters need to demonstrate a commitment to DAB – and notes that this is happening, “Absolute Radio has launched Absolute 60’s, 70’s, and of course, there is Radio 4 Extra, so the content proposition continues to strengthen and this remains one of the key reasons to move to digital radio.”

According to Peter Hainsworth, “There are many reasons why customers choose DAB, and content is one of them. The Olympics brings a massive opportunity, with DAB broadcasters like the BBC able to make more content available to consumers. Coverage is being addressed and there is a clear roadmap to achieve the same coverage to that of FM. With regard to functionality, the beauty of DAB is its simplicity – just search for a station by name and select it.” Colin Crawford says that, “The recent Rajar figures indicate that digital radio content is strong and compelling, although we’d agree that coverage needs to be improved and that is being addressed within the Digital Radio Action Plan. The main thing that will accelerate the take-up of DAB is consistent and sustained industry-wide promotion, including the use of the digital tick.”

The digital switchover

Roger Darlington also thinks the digital radio switchover could happen in 2019, but is this feasible?  “A 2019 switchover is definitely possible; however there are a number of factors that have to be considered before this can become a reality. The key factors are coverage and accessibility of the content,” says Peter Hainsworth. But Colin Crawford thinks that, “This fixation with a date is counter-productive. The key point is that all stakeholders in the radio industry, including manufacturers and retailers, must work together to accelerate the eventual switchover schedule.”  Owen Watters agrees, “It is extremely premature to discuss finite dates.  Whilst there has been a lot of progression in the move to switch over during the last year, there is still a lot of work to do to ensure that the UK is geared up for the official switch o
ver.”

The omni-present radio

The Rajar statistics also show that around 15% of people listen to radio on a mobile phone (the figure is 32% for 15-24 year-olds), and Tim Davie, the BBC’s head of audio and music, says that radio needs to be established on smartphones, tablets and other portable devices in order to appeal to younger listeners. Peter Hainsworth agrees, “Radio needs to be accessible to everyone on their preferred digital device, whether that’s a DAB radio, the internet, TV, a tablet or a smart phone.” Owen Watters says, “Smart phones can tune into services from around the world via radio apps for Apple and Android devices,” while Colin Crawford notes that, “Radio is already well established across multiple devices through apps such as the Pure Lounge App. We are in a multi-platform world and radio needs to be available across all devices.”

 Some wonder how the take-up of internet radio is affecting the DAB market. Colin Crawford thinks that, “The growth of internet radio is going hand in hand with an increase in digital radio listening. We need broadcast digital radio, as the internet can’t replace DAB.”  Wi-Fi radio will remain a complementary format to DAB for the foreseeable future, says Owen Watters, “Connected devices do offer a broader experience than DAB radio, such as music streaming and stations from around the globe, but most consumers simply want to enjoy their local stations and benefit from the ease of use that DAB can offer.”

So how optimistic are manufacturers about DAB replacing FM? “It’s not a question of DAB replacing FM – DAB is here to complement FM. The switchover will allow local services, like hospital and community stations, to have a share of the airwaves, enriching the range of content for listeners,” says Hainsworth. Watters believes that, “The industry is getting there, but there is still a way to go, which is why a lot of our DAB products still offer the FM option.” Colin Crawford thinks that, “FM will always have a place for local broadcasting, but we are confident that national broadcasting will move to digital.”

The digital radio market

The consumer electronics market over the past 12 months has been very rough on both manufacturers and retailers, with its value down 15.7% year on year (Jan 2011 – Dec 2011).

DAB has not been isolated from the economic downturn, with the value of the market down 11% year on year (Jan 2011 – Dec 2011) and volumes down 2% over the same period. However, it must be emphasised that these declines are viewed more optimistically when compared to declines found in other CE products, such as Plasma TV or portable media players, and more specifically to the overall radio market which declined by 15% in volume during 2011. Furthermore, DAB sales have now exceeded a quarter of all radios sold during 2011, compared to roughly a fifth in 2010, which is partly down to greater sales of portable DAB radios. Lastly, an area of growing interest within the digital radio empire is the continued momentum being gained by internet radio, whether it be hybrids (Internet + DAB) or standalone (internet only), with the latter exceeding 100,000 units for the first time in 2011.

Commentary by Shane Björkman, GfK account manager shane.bjorkman@gfk.com, www.gfkrt.com/uk

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