Wednesday, November 7, 2007

Digital Radio Set for Major Growth

Despite what some nay-sayers might believe, digital radio is set for major growth, with satellite radio leading the pack in the U.S. According to a study conducted by market research firm In-Stat, sales in the digital radio market are expected to rise three-fold from 2006 to 2011, reaching almost 32 million units four years from now.

It's interesting that satellite radio technology is still numero-uno south of the border, especially given the growing consumer awareness of HD Radio, which permits participating stations to simulcast in digital format. Further, HD Radio is actually free, whereas satellite radio requires that you pay for a subscription to access it!

The In-Stat study reports that 'increased choice of programming" is the primary driver of digital radio. In my opinion, the absence of commercials is just as significant a driver. Sure, it's important to be able to hear the local news, commentary, and traffic updates; but on the other hand, if I have a 20-minute commute to the office, I don't want to spend half that time listening to commercials in between tunes and the DJ's witty repertoire. Heck, on some days, I don't even want to hear the DJ, which is where a station with constant song after song after song is a welcome option.

Of course, there are customers with whom the music offerings on satellite radio simply don't appeal (major classical music aficionados, come to mind as an example). But for others, a few weeks with satellite radio will have you hooked; and the nominal, yearly fee likely won't phase you.

The results of the In-Stat report are even more topical, given the possible merger that's surrounding the two satellite radio providers, Sirius and XM. Personally, I think competition is a good thing, and with one, powerhouse provider, we might see less appealing deals and offerings. Let's hope this isn't the case. And even if a merger happens, it will take plenty of time to smooth out details; and since the Canadian counterparts operate independently from the U.S., the changeover may take even longer to happen here.

4 comments:

PocketRadio said...

Yea, right - DAB has stalled in Canada and the US and is slowing in the UK. Digital radio is a farce:

http://hdradiofarce.blogspot.com/

Marketnews - Christine Persaud said...

Hi pocketradio,

thanks for the comments. I'm not sure if I agree with you entirely. The blog you referenced discusses HD Radio alone; not other forms of digital radio, like satellite. Deloitte just ranked Sirius Satellite Radio as number one on its wireless fast 50 list, based on a reported 79% revenue growth over the past 5 years. Consumer awareness of HD Radio has indeed grown (to be exact, In-Stat reports that awareness has jumped from 57% of survey respondents in 2005 to 77% in 2007). It is entirely possible, however, that people aren't bothering to take advantage of it.

I appreciate your feedback - keep it coming!

PocketRadio said...

I hope that with automakers more-and-more making SatRad standard/optional that it will help to keep HD Radio out of the dash - HD/IBOC is jamming our airways. Ford is installing statndard/optional Sync and is starting to advertise on TV. Ford is only installing dealer-installed, point-of-sale $350 HD radios, that no one will want - Ford owns Visteon and is an investor in the failing iBiquity.

Anonymous said...

The Europeans have always initiated/embraced technology faster than North Americans. Internet is an example. Whereas just about all Europeans use SKYPE, most Canadians have no idea what it is.

We've tried DAB in Canada but the $800 receivers were beyond the justification of the average user.
IBOC has the possibility to make it feasible. Loyal listeners are excited at the prospect of listening to their favorite morning show with the clarity of FM/CD. There's no need to woo them - they're already faithful.

I think studies are useless because people will naturally transition, like AM to FM years ago and the analog to digital switch we're seeing in TV.