DAB+ business case and critical success factors

1. DAB+ business case and critical success factors Patrick Hannon Poznan: 10th April 2014

2. Contents • Introduction to WorldDMB • Radio today • Business case • Critical success factors

3. WorldDMB – who we are • Not-for-profit membership organisation • Developed DAB technical standards • Promote digital radio (DAB / DAB+) around the world

4. Over 80 members from 22 countries Networks / regulators Technology Devices / equipment Automotive Broadcasters

5. We work with players across the radio ecosystem Policy makers and regulators Retailers Devices Automotive Broadcasters Network operators Silicon providers

6. Contents • Introduction to WorldDMB • Radio today • Business case • Critical success factors

7. For broadcasters, the competitive landscape is changing Online music services • Digital music services • Smart devices • Competition for FM radio

8. Younger audiences are listening less Changes in youth per capita listening hours, 2006-101 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).

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 Norway Sweden Denmark Ireland NL UK Poland Germany Bel Czech Slovakia Austria Hungary Switzerland France Slovenia Italy Portugal Spain

11. Four core markets: UK, Norway, Denmark and Switzerland Established markets Norway Sweden Denmark Ireland NL UK Poland Germany Bel Czech Slovakia Austria Hungary Switzerland France Slovenia Italy Portugal Spain

12. Followed by Germany (2011) and Netherlands (2013) Established markets New markets Norway Sweden Denmark Ireland NL UK Poland Germany Bel Czech Slovakia Austria Hungary Switzerland France Slovenia Italy Portugal Spain

13. Several potential markets Established markets New markets Norway Sweden Denmark Ireland NL UK Poland Germany Bel Czech Potential markets Slovakia Austria Hungary Switzerland France Slovenia Italy Portugal Spain

14. Poland: first services on air Established markets New markets Norway Sweden Denmark Poland? Ireland NL UK Poland Germany Bel Czech Potential markets Slovakia Austria Hungary Switzerland France Slovenia Italy Portugal Spain

15. DAB+ distribution costs about 10% of FM for a single service Annual cost of transmission1, $k -92% -89% -82% Source: Harris Broadcast Note: (1) Opex costs; on DAB+, assumes 18 services on multiplex

16. DAB / DAB+ radios now mass market Prices from $29

17. Digital radios now consume 20% less power than FM devices Power consumption of in-use devices, W 20% lower Source: DCMS / IntertekTechnical Report, March 2013

18. Automotive brands offering DAB – increasingly as standard

19. Contents • Introduction to WorldDMB • Radio today • Business case • Critical success factors

20. How can digital radio build value for broadcasters? Innovation 1 2 Increase audiences Increase revenues

21. How can digital radio build value for broadcasters? Innovation 1 2 Increase audiences Increase revenues

22. Benefits for listeners Benefits of DAB / DAB+ Sound quality Choice Additional features

23. Sound quality and choice are top two benefits UK, % benefits of digital radio Source: Ofcom

24. Specialist music services – for niche audiences UK Australia Germany Classic Rock Unsigned bands Electronic music Classical Decade Country

25. Specialist speech services – e.g. sports or archive Sport Science Drama & comedy • 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. Potential to extend geographic reach Energy on FM Energy on DAB+ Hamburg Berlin Rhein-Main Nuremberg Stuttgart Munich

28. Extend the brand portfolio Analogue and digital Digital-only services

29. Absolute’s listening hours - up 95% Weekly listening hours, m +95% Source: RAJAR

30. Rebranding as “Radio 4 Extra” added 37% listening Weekly listening hours, m • Radio 7 (DAB), sister station to Radio 4 (FM) • Rebranded as 4 Extra in 2011 +37% Source: RAJAR

31. How can digital radio build value for broadcasters? Innovation 1 2 Increase audiences Increase revenues

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. New song • Hear new song on radio • Hit button • for info • add to playlist • share with friends

41. Advertising • Hear ad on radio / see visual display • Tag to interact • access more information • register interest

42. Contents • Introduction to WorldDMB • Radio today • Business case • Critical success factors

43. Critical success factors Policy and regulation Consumers Retailers Cars Coverage Content Consumer devices

44. 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. Coverage – work together to create cost-effective plan • Start on major population centres • Define strategy for major roads Government Network providers Regulator Commercial broadcasters Public broadcasters

46. Digital content proposition must be stronger than FM Sydney analogue services Sydney digital services 17 services on AM and FM Over 40 on DAB+

47. Devices available from wide range of suppliers

48. Marketing activities must be co-ordinated and sustained • Consumer advertising encourages footfall and inspires confidence in retailers Consumer marketing Retail activity • Retail (with the right product, point of sale and trained sales people) delivers sales

49. TV ads, heavy FM promotion and device give-aways Source: BBC and BayerischeRundfunk

50. Devices available in-store • Must have strong retail support for DAB+ radio • Devices on shelves • Training for staff • Post-code checker • Repeaters MediaMarkt, Berlin, March 2013