DAB+ business case and critical success factorsPatrick HannonPoznan: 10th April 2014

2

Contents

1. Introduction to WorldDMB

2. Radio today

3. Business case

4. Critical success factors

3

• Not-for-profit membership organisation

• Developed DAB technical standards

• Promote digital radio (DAB / DAB+) around the world

WorldDMB – who we are

4

Over 80 members from 22 countries

Broadcasters Networks / regulators Technology AutomotiveDevices /

equipment

5

Policy makers and regulators

We work with players across the radio ecosystem

Broadcasters Network operators Devices AutomotiveSilicon

providers Retailers

6

Contents

1. Introduction to WorldDMB

2. Radio today

3. Business case

4. Critical success factors

7

• Digital music services

• Smart devices

• Competition for FM radio

Online music services

For broadcasters, the competitive landscape is changing

8

Changes in youth per capita listening hours, 2006-101

-27%

-17%-14% -13%

-9% -7% -7%

Sweden UK USA Italy Germany France Spain

Note: (1) Definition of youth varies by market; e.g. Sweden (9-19s), UK (15-24s); US data 2006-08 & 2009-11 (new methodology in 2009). Source: EBU (Europe), Arbitron (US).

Younger audiences are listening less

9

In many markets, FM spectrum is full – difficult to innovate

• Overloaded airwaves

• No capacity for new services

• Difficult to innovate

10

A digital radio wave is moving across Europe

UK

Norway

Sweden

Germany

France

Spain

Italy

Switzerland

NL

Bel

Denmark

Poland

Czech

Austria

Ireland

Portugal

Slovenia

Slovakia

Hungary

11

Four core markets: UK, Norway, Denmark and Switzerland

UK

Norway

Sweden

Germany

France

Spain

Italy

Switzerland

NL

Bel

Denmark

Poland

Czech

Austria

Ireland

Portugal

Slovenia

Slovakia

Hungary

Established markets

12

Followed by Germany (2011) and Netherlands (2013)

UK

Norway

Sweden

Germany

France

Spain

Italy

Switzerland

NL

Bel

Denmark

Poland

Czech

Austria

Ireland

Portugal

Slovenia

Slovakia

Hungary

Established markets

Newmarkets

13

Several potential markets

UK

Norway

Sweden

Germany

France

Spain

Italy

Switzerland

NL

Bel

Denmark

Poland

Czech

Austria

Ireland

Portugal

Slovenia

Slovakia

Hungary

Established markets

Newmarkets

Potentialmarkets

14

Poland: first services on air

UK

Norway

Sweden

Germany

France

Spain

Italy

Switzerland

NL

Bel

Denmark

Poland

Czech

Austria

Ireland

Portugal

Slovenia

Slovakia

Hungary

Established markets

Newmarkets

Potentialmarkets

Poland?

15

Annual cost of transmission1, $k

385

925

1645

68 98 128

Owned site Regional site Metro site

FM DAB+

Source: Harris BroadcastNote: (1) Opex costs; on DAB+, assumes 18 services on multiplex

DAB+ distribution costs about 10% of FM for a single service

-92%

-89%

-82%

16

DAB / DAB+ radios now mass market

Prices from $29

17

Power consumption of in-use devices, W

Source: DCMS / Intertek Technical Report, March 2013

Digital radios now consume 20% less power than FM devices

4.693.75

FM radio DAB radio

20% lower

18

Automotive brands offering DAB – increasingly as standard

19

Contents

1. Introduction to WorldDMB

2. Radio today

3. Business case

4. Critical success factors

20

Increase audiences

Increaserevenues

Innovation

How can digital radio build value for broadcasters?

1 2

21

Increase audiences

Increaserevenues

Innovation

How can digital radio build value for broadcasters?

1 2

22

Sound quality Choice Additionalfeatures

Benefits of DAB / DAB+

Benefits for listeners

23

UK, % benefits of digital radio

65%59%

35%

24% 23%

Sound quality Wider choice Easy tuning Textinformation

Extra features

Source: Ofcom

Sound quality and choice are top two benefits

24

UK Australia Germany

Electronic music

ClassicalDecade Country

Unsigned bandsClassic Rock

Specialist music services – for niche audiences

25

Sport Drama & comedyScience

Specialist speech services – e.g. sports or archive

• Germany: live football

• Up to 5 matches simultaneously

• UK: archive from the BBC

• Germany: higher education for younger audiences

26

Strong brands – key to success

27

Energy on FM

Hamburg

Berlin

Nuremberg

Stuttgart Munich

Rhein-Main

Potential to extend geographic reach

Energy on DAB+

28

Analogue and digital Digital-only services

Extend the brand portfolio

29

Weekly listening hours, m

11.3 9.5 11.2 12.6 12.3

1.7 6.47.613.0

15.818.8

22.825.3

13.010.2

Q4 09 Q4 10 Q4 11 Q4 12 Q4 13

Absolute Radio (core service) Absolute digital-only services

Source: RAJAR

+95%

Absolute’s listening hours - up 95%

30

5.86.7 6.7

9.2

9.2

Q1 10 Q3 10 Q1 11 Q3 11

Source: RAJAR

+37%

Rebranding as “Radio 4 Extra” added 37% listeningWeekly listening hours, m

• Radio 7 (DAB), sister station to Radio 4 (FM)• Rebranded as 4 Extra in 2011

31

Increase audiences

Increaserevenues

Innovation

How can digital radio build value for broadcasters?

1 2

32

Sponsorship opportunities – youth audiences

33

Branded stations take sponsorship to new level

• Branded channels – aimed at housewives target audience

34

Pop up stations – for range of events

35

Sponsorship opportunities – music tour & digital radio station

36

Sponsorship opportunities – music tour & digital radio station

37

Colour screen devices create new opportunities

Revo Pixis

38

Colour images for additional information

39

Hybrid radios with Bluetooth connectivity – from €59

John Lewis Spectrum Duo

40

• Hear new song on radio

• Hit button

- for info

- add to playlist

- share with friends

New song

41

• Hear ad on radio / see visual display

• Tag to interact

- access more information

- register interest

Advertising

42

Contents

1. Introduction to WorldDMB

2. Radio today

3. Business case

4. Critical success factors

43

Policy and regulation

Critical success factors

Coverage Content Retailers CarsConsumer devices Consumers

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Policy and regulatory framework

Policy• Clear vision and commitment to a digital future from

Government / regulators

Public radio

• Success of digital radio depends on active support of major broadcasters – needs to be funded

Private radio

• Link between commitment to DAB+ and renewal of FM licences

• For digital services, reduce regulation (fewer restrictions)

45

Government

Network providers Regulator

Commercial broadcasters

Public broadcasters

Coverage – work together to create cost-effective plan

• Start on major population centres

• Define strategy for major roads

46

17 services on AM and FM Over 40 on DAB+

Digital content proposition must be stronger than FM

Sydney analogue services Sydney digital services

47

Devices available from wide range of suppliers

48

Retail activityConsumer marketing

• Consumer advertising encourages footfall and inspires confidence in retailers

• Retail (with the right product, point of sale and trained sales people) delivers sales

Marketing activities must be co-ordinated and sustained

49

TV ads, heavy FM promotion and device give-aways

Source: BBC and Bayerische Rundfunk

50

Devices available in-store

MediaMarkt, Berlin, March 2013

• Must have strong retail support for DAB+ radio

• Devices on shelves

• Training for staff

• Post-code checker

• Repeaters

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• Educate local importers and dealers

- consumer benefits

- coverage plans

- long term commitment to DAB+

• Work with international partners

Automotive – work with manufacturers to fit DAB+ as standard

52

Policy makers and regulators

Industry stakeholder

body

Key to success is collaboration

Broadcasters Network operators Devices Retailers Automotive Consumers

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Thank you

For further information, please contact:www.worlddab.org

54Source: CAP/SMMT

0%

10%

20%

30%

40%

50% Standard Cost Option

Q1 10 Q4 10 Q1 12 Q1 13 Q1 14

4%10%

22%

35%

45%

In UK, 45% of new cars have DAB as standard