03 15-1200 patrick hannon - going for a digital future

Why digital radio?Patrick Hannon

15th March 2012, Barcelona

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Contents

Radio today

Benefits of digital radio

Keys to success

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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

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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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Contents

Radio today

Benefits of digital radio

Keys to success

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1

3

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Sound &ease of use

ChoiceAdditional

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

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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

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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 areaSource: RAJAR, PH analysis

98%83%

66%

19%

15%14%

3%2%

UK AM / FM UK DAB UK online

AM / FM services (simulcasts) Incumbent digital-onlyNew entrants and others

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Geographic coverage

Develop portfolioDeepen 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?

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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 DABDAB-only

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Analogue and digital Digital-only services

Second, broadcasters can use digital to extend their brand portfolio

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Absolute Radio, weekly listening hours, m

11.4 11.3 11.1 11.6 11.6

1.2 2.04.412.6 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

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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)

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Stations in UK, Germany and Australia use colour images to provide information and cross-promote services

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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

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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

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•Listening to programme is interrupted

•Tag and listen later

-same or different device

Listen later – on any connected device

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•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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Contents

Radio today

Benefits of digital radio

Keys to success

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1

3

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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 devices

Cars Retail Consumers

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Thank you

Patrick Hannon

VP Corporate Development Frontier Silicon

[email protected]

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5.6

6.7

5.4

6.7

8.6

9.2

5.7 5.8

Q4 09 Q1 10 Q2 10 Q3 10 Q4 10 Q1 11 Q2 11 Q3 11

Radio 4ExtraRadio 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