DAB Digital Radio UK Market Update Mike Spencer Marketing Director DRDB.

DAB Digital RadioUK Market Update

Mike SpencerMarketing Director DRDB

DRDB - Who We Are

BBC

Digital OneEmap

Capital

MISSION: to ensure digital radio's wide accessibility and swift adoption in the UK

MXR

GWR

• Understand the DAB market

• Promote to the consumer

• Support retailers

• Encourage & assist manufacturers

DRDB - What do we do?

DAB For consumers it’s all about

station choice

275 analogue services

As of 30 April 2004. Analogue figure – Ofcom (licences awarded)

398 DAB servicesAnd 2 multiplexes yet to launch, so over 400 by the end of this year

55% (or 217 services) - only available with a DAB radio

181 services - straight analogue simulcast

comprising….

E.G.Bristol Analogue Radio

National Regional Local

E.G. Bristol Digital Radio

National Regional Local

71

44

40

38

21

15

9

9

8

7

5

5

2

0 10 20 30 40 50 60 70 80

To receive new digital stations

To receive improved reception of existing stations

Sound quality

Price

Product appearance/design

Easy to tune

Programme content

Size

Other

Recommendation by friends/relatives

Brand

Text and information

Recommendation of salesperson

apr-may 04

% of card returns

Source: Claritas post-reg cards

Q. Which factors influenced you to buy DAB over analogue?

Copyright: DRDB

Brand very gradually becoming more of a factor?

Consumers are buying DAB for the new digital stations

The price of DAB is increasingly more attractive – was around 20%3 months ago

DAB owners – why are they buying?

National Services - Coverage

• 50 million peoplecovered

• Digital One - 85%– 83 transmitters on-line

• BBC – 80%– 85% by mid 2004– rolling-out 47 transmitters

Digital One

BBC

BBC + Digital One

82

100

7161

45

154

2919

J an-02 jan 03 sept 03 dec 03 May 04 J ul-04 Sep-04 dec 04

forecast

DAB – explosion in product

no. of different DAB products in the marketplace – cumulative

2003 2004

50 new products so far this year Another 54 to come (est.)

DAB – value sales – continued growth Delivering a substantial market

Sales have delivered a

£54 million

market in the last year (y/e jul 04)

Analogue volume in millions5478

5458

feb-jul 03 feb-jul 04

In summary: the analogue marketin decline

Analogue value (in £ millions)

£468.833

£410.785

feb-jul 03 feb-jul 04

-0.4% -12%

Source: GFK

DAB volume in 000s

70.4

205.1

feb-jul 03 feb-jul 04

The DAB market – healthy growth

DAB value (in £ millions)

£8.978

£23.607

feb-jul 03 feb-jul 04

+191% +163%

Source: GFK

Av price of a kitchen radio – DAB v analogue Analogue price cutting

£103 £102 £102 £101£105

£101

£109 £114 £110£105

£99

£31 £29 £30 £30 £29 £28 £27 £28 £29 £28 £27 £25 £24 £24£19

£108

£25£27£30

Aug-Sept01

Oct-Nov01

Dec01-Jan02

Feb-Mar02

Apr-May02

Jun-Jul 02

Aug-Sept02

Oct-Nov02

Dec02-Jan03

Feb-Mar03

Apr-May03

Jun-Jul 03

Aug-Sept03

Oct-Nov03

Dec-Jan04

feb-mar04

apr-may04

apr-may05

DAB transistor radio

ANALOGUE transistor radio

-24.1

-17.3

-12

-6.3

1.3

25.4

45.9

0.6

3.3

0.2

Portable CD

Boomboxes

Portable MD

Clock Radios

Headphones

MP3 Players

Personal Stereo

Personal Radio

Transistor Radios

Total Portable Audio

y/e may 04 v y/e may 03

DAB sectors – the only sectors in average price increase

Most markets showeda stronger decline in average price £ in May than for the year in total - underlining the continuous price pressure in the market.

Portable audio – % change in £ average priceDAB sectors – the only sectors to see price increases

CE market – % change in £ average priceDAB sectors – the only sectors to see price increases

-36.5

-26.3

-24.9

-24.1

-17.3

-13.2

-12.8

-11.8

-11.4

0.6

25.4

45.9

-29.3

-19.5

-10.3

-22.5

-24.6

DVD Players

DVD Total

DVD Recorders

Home Theatre Systems

TVR

Port CD

Plasma

LCD TV

RCR

CTV Total

CTV 16:9

Audio Systems

Camcorders

VCR

Portable Audio

Pers Rad

Tran Rad

Source: GFK % change y/e May 04 v y/e May 03

Retailers

600

4,000

6,000

2002 2003 2004

7 fold growth

End of 2003 March 2004

+50%

Competitive marketin a short space of time

independents

over

48.760.7

74.6

176.0

36.730.4

22.5

69.6

17.122.6

dec02/jan

03

feb/mar 03 apr/may

03

jun/jul 03 aug/sept

03

oct/nov 03 Dec/jan 04 Feb/Mar

04

Apr/May

04

jun/jul 04*

DAB digital radio sales A record june/july predicted

Source: GFK

(volume in 000s)

GFK – approx 88% coverage of the DAB market

* = estimate

163.1185.6

216.0252.7

301.4

682.3

607.7

547.0

477.4

146.0135.060.0

160.0

260.0

360.0

460.0

560.0

660.0

up to dec02

jan 03 feb/mar 03 apr/may03

jun/jul 03 aug/sept03

oct/nov 03 dec/jan 04 Feb/mar04

Apr/May04

jun/jul 04

DAB digital radio- cumulative salesJust shy of 700k

Source: GFK

+17.1k +22.5k +30.4kGFKbimonthly sales

(volume in 000s)

+36.7k+11.0k +176k

DAB penetration estimated up to end jul 04

682k

+48.7k

GFK – approx 88% coverage of the DAB market

+69.6k +60.7k +74.6kestimate ****

Kitchen portables marketNow very much a DAB market

% of value

Source: GFK

0% 0% 0% 0% 0% 0%4%

9%

14%18%

30%

36%39%

50%

67%

61% 61%62%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Aug-Sept01

Oct-Nov 01

Dec01-Jan

02

Feb-Mar 02

Apr-May 02

Jun-Jul02

Aug-Sept02

Oct-Nov 02

Dec02-Jan

03

Feb-Mar 03

Apr-May 03

Jun-Jul03

Aug-Sept03

Oct-Nov 03

Dec-Jan 04

feb-mar04

apr-may 04

jun-jul04

DAB Kitchen portableAnalogue Kitchen portable

Kitchen Radios Market Value 1987-jan 2004

17.8 17.7 18.1

22.5 20.619.7

19 18.517.6 19.1

21.323 22.5

27.4

30.5 30.4

54.6

1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002* 2003**

Value £ millions

* 52 w/e Nov **feb03-jan04

Source: GFKCopyright: DRDB

Consumer Marketing

DAB – ever increasing press coverage

45

130

155

175

155 155170

238

172 167

206

170

213 212203 210

237222

272

302

256267

385

283297

374

312 313M

ay

-02

Ju

n-0

2

Ju

l-0

2

Au

g-0

2

Se

p-0

2

Oc

t-0

2

No

v-0

2

De

c-0

2

Ja

n-0

3

Fe

b-0

3

Ma

r-0

3

Ap

r-0

3

Ma

y-0

3

Ju

n-0

3

Ju

l-0

3

Au

g-0

3

Se

p-0

3

Oc

t-0

3

No

v-0

3

De

c-0

3

Ja

n-0

4

Fe

b-0

4

Ma

r-0

4

Ap

r-0

4

Ma

y-0

4

Ju

n-0

4

Ju

l-0

4

Au

g-0

4

Source: Romeike

No. of articles

March – regional GM Daewoo articles

= £1.2 millionadvertising value

Virgin – Win ‘His and Hers’ DAB digital radiosSept 2004

Classic FM Survey / Win a DAB digital radio

DAB Pink Intempo - Cosmo Bride September 04 issue

DABIn the lifestyle

magazines

Pure’s The Bug in ‘Closer’

Retailer advertising

Currys

in-store brochureSept 04

Comet

Comet

Summer 2004Flyer

Roberts Radio The 1st radio brand - high profile ad campaign

• £0.5 million press campaign

• Autumn 2004• 65 insertions, across

the broadsheets, the Sunday broadsheets and the Radio Times

Growth in retailer effectiveness

24% first learnt about their DAB radio from a

in-store display

Source: Claritas

% of card returns

Where did they first learn about this product?

Success to date

24

21

13

88

4 5 46

3 21 1 0.3

In s

tore

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as

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lativ

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Inte

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eb

site

TV

ad

vert

ise

me

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wsp

ap

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/ Ma

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wsp

ap

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ad

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ise

me

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pe

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ich

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ep

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Sa

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V a

dve

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mp

etit

ion

/Pro

mo

tion

Jan-Mar 04

% of card returns

DAB prompted awarenessOver half of the UK population now aware of DAB

Source: DRDB Tracker (Ipsos RSL Omnibus) – prompted awareness

• Awareness up 8 percentage points in just 6 months

• And up 18 percentage points in the last year

16%

30%33%

43%

52%

0%

10%

20%

30%

40%

50%

60%

end of 2001 May-03 Aug-03 Jan-04 Aug-04

= 25.4 million 15+ adults

(15+ population: 48.862 million Rajar Q2 2004)

Q. DAB digital radio is……Have you heard of this? (prompted awareness)

Broadcaster advertising

Emap

full page adin Retail Week

Sept 04

Offering retailers who are advertising DAB brands a 50% discount on Emap’s

digital stations

Consumer Feedback

94 94 9392 91 91 89 88

82 79

0

10

20

30

40

50

60

70

80

90

100

Easy to tune Sound quality To receivenew digitalstations

Productappearance

To receiveimproved

reception ofexistingstations

Size Average Programmecontent

Text andinformation

Value formoney

% of respondents who state good/excellent satisfaction for that feature

High satisfaction amongst owners89% state good/excellent satisfaction with their radio & its features

Source: Claritas oct-dec 2003

• ALL features above 79% good/excellent satisfaction

• Easy to tune, sound quality & new stations are the big winners

• Increased satisfaction in product appearance – now 4th

Listening Changes

• Commercial radio share increasing– 47% of analogue listening– 80% of digital listening

• Number of stations listened to increasing– 2.4 stations (analogue listeners)– 3.6 stations (digital listeners)

• Length of listening increasing– Digital listening ~1.4 hours more a day

Sources: RAJAR Q1 2004, and Continental Research report for MXR (April 2004)

In-car developments

DAB in-car developmentsVauxhall New Astra• Excellent uptake of DAB so far.

– Total cars built: 28,000 With DAB: 1,245 (3.9%)– Total cars registered: 19,000 With DAB: 745 (4.4%)– NB. Compares to typical 1 to 2% uptake of similar options

• Special Edition model – ‘SXI Digital’ – In showrooms from 20th September

– 500 display/ demo cars in dealers. Complete with livery that says “Go Digital. DAB Digital Radio as standard”

– DRDB-produced ad campaign on-air from 9th Sept to 8th Oct

– Vauxhall running motoring press ads to say “DAB fitted as standard”

DAB in-car developmentsVauxhall – Other models• DAB option now extended to

other models– Vectra, Corsa, Meriva,

Signum, Corsavan and Combo

– DAB is included in most basic audio upgrade

– Same pricing (£400 for DAB + 6-CD changer)

• DAB option part of New Zafira launch, summer ’05

• From Oct 1st DAB fitted as standard on Vectra higher end variants – Design, Elite, GSi

Marketing plans 2004

Advertising & Forecasts

DRDB advertising plans

• “Breadth of range” 5th - 31st July

• “In-car” Vauxhall 9th Sept – 9th Oct.

• “Teaser campaign” 9th Oct – 7th Nov.

• Christmas campaign i.e. easy access, breadth of range, price, in-car.

1st -24th Dec.

DRDB Aims this year

• Sales target – 1 million cumulative

• Converting the 48% ‘DAB non-aware’ mass market

• Driving consumers to retailers

• Broaden product range

• Broadening the ownership profile