The DAB way

So DAB is bucking the trend in volume terms. What’s more, at the end of the year, the Digital Radio Working Group published its long awaited report, which recommended a migration plan for moving from analogue radio to digital. This has since been endorsed by the Carter Report on Digital Britain, which wants to see all parties (government, manufacturers and broadcasters) develop a digital radio migration plan that could start to be implemented by 2015. Carter also came down firmly in support of DAB, despite some media commentators declaring that DAB was yesterday’s technology.

But it’s not all good news for DAB. Sales may now be moving towards the 10 million mark, but that’s still less than a tenth of the number of analogue radios on the market. DAB price points have fallen, which has helped boost sales but also meant even tighter margins. The much publicised withdrawal (or in the case of 4Digital – non-arrival) of some DAB commercial stations generated all manner of negative activity, although it doesn’t seem to have affected consumer confidence in DAB to any great degree.

Prospects for 2009

So what are DAB’s prospects for 2009? No surprise that in the current economic climate, manufacturers are a little cautious. Colin Crawford, Pure Digital’s director of marketing, says that: “Last year was down a little on value and that’s a little concerning for manufacturers and retailers. Two thousand and nine will be hard in the UK and the best thing we can do is to bring out good products that consumers want. But this year could be a little flat.” Bernadette Spofforth, founder of Intempo Digital, thinks that: “DAB could struggle in 2009 if consumers consider DAB radios as discretionary spend. DAB as a gift is always going to be a good option, especially for the older consumer, so at gift times in the year, DAB sales should still be strong.”

Leslie Burrage, chief executive of Roberts Radio, adds that: “There is no denying that 2009 is going to be a tough year, however, we have lots of exciting products lined up that will continue to drive the DAB message to our consumers and further strengthen the proposition. We should therefore expect to see the continual growth of DAB here in the UK.” Panasonic is also optimistic about the future: “We are confident that DAB sales will again contribute excellent value to our business in 2009.  Fifty percent of our new 2009 range of 2-channel systems will be DAB products; it will therefore be an integral part of that line-up,” says, Adam Marshall, Panasonic’s Home AV marketing assistant.  Naoto Yoshioka, Sony’s personal audio product manager, is also upbeat: “A large percentage of UK households play music through radio or hi-fi systems. With DAB firmly established as the standard in radio, consumers will continue to refresh technology. As such we anticipate steady, continued sales of DAB product.”

The market drivers

A number of factors are responsible for last December’s excellent DAB sales figures, including lower price points, says Intempo’s Spofforth: “Price discounting played a huge part again in the sales of DAB. However the figure was still down on December 2007 in comparison to the iPod accessory and gaming accessory markets; DAB is now falling way behind in new technology take up. This should be a worry for manufacturers who have not diversified their audio range into other areas.” Greater publicity also played a role, says Panasonic’s Marshall: “DAB radio is starting to receive increased coverage and therefore increasing sales. A greater proportion of DAB radios are being sold at the £30-49 price segment, as more and more tertiary brands enter the market. Consumers are also becoming increasingly aware of the better sound quality and increased choice of stations available with DAB.”

For Pure’s Crawford, healthy sales were about releasing good products: “Price points are important and you can now get a good quality £40 DAB radio or one costing more than £100; DAB covers the whole price range of every sector, whether it’s iPod docking, internet radio or a mini system.” Roberts’ Burrage says his company was pleasantly surprised with the sales performance of key models such as the iDream and Sound 43, with sales easily outperforming the company’s forecast. Burrage also thinks that publicity helped: “Our continued above the line spend, and the co-ordinated activity with the DRDB, succeeded in generating a huge amount of promotion for DAB in the press, along with a strong DAB advertising campaign on TV and across BBC and commercial radio. As a result, DAB sales continue to increase and there is a greater understanding amongst consumers of the benefits.”

Activity by the DRDB has also played a part and the Bureau has undertaken a number of initiatives to encourage DAB sales, such as licensing in-store DAB repeaters to improve in-store reception. But what else would manufacturers like to see DRDB doing – and what can manufacturers, retailers and broadcasters do to encourage DAB take up?  Panasonic’s Marshall says: “The initiatives undertaken by the DRDB will certainly help to encourage DAB sales. As a manufacturer, we need to continue to promote the benefits of DAB radios in our product line up. It is important for the broadcasters to have a wide range of stations available, as the more content available will attract a wider audience.” 

Pure’s Crawford says: “DRDB needs to do the obvious well – promote DAB and digital radio all the time. We need digital idents and a positive message about DAB. They need to start now and not just wait until two weeks at Christmas. If we can cross-promote that helps and if we could work towards what happened with DVD when it was launched – if you walked into a shop, you could clearly see the DVD logo and a clear point-of-sale section. We’ve not managed to get that yet with digital radio.” The DRDB needs to appeal to the younger market, says Intempo’s Spofforth: “Personally, we do not see much value in in-store guides or repeaters that have artificially high DAB signal strength, as this could mislead consumers. DAB needs to appeal to the younger buyer that listens to radio but would rather spend money on iPods or games. Converging DAB into speakers has been successful with this younger buyer. A name change may help as well – isn’t it time to drop ‘DAB’ and call it ‘digital radio’?”

Common goals

Sony’s Yoshioka thinks that:  “We need to continue along the same vein in continuing to communicate and educate about the strength of the technology. Design is a key influence for consumers, so as a manufacturer we must continue to offer a great design solution and incorporate key technologies to future proof the product.”

Roberts’ Burrage says: “We have identified the need to drive radio to digital via a closer working relationship between the government, broadcasters, Ofcom and manufacturers alike. The government’s commitment to DAB, as outlined in its digital migration plan, now gives all parties a common goal to work towards and we are keen to get going.”

The proposed digital migration action plan has been received positively.  “It’s a sensible road map,” says Pure’s Crawford. “We fully support the recommendations made by the DRWG and DAB, and it is imperative that we now work together to provide distinctive digital services and extensive coverage,” adds Roberts’ Burrage. Panasonic also feels th
e action plan is a good idea. “It will follow in the footsteps of TV digital switchover therefore giving the public some idea of what the switchover involves,” notes Marshall. Sony’s Yoshioka is also enthusiastic: “With DAB being a far superior technology to analogue, we would support this action, as it will greatly enhance consumer experience.” However, Intempo’s Spofforth is more cautious: “I’m easy either way: the delivery of broadcast audio will be via DAB, internet, FM or podcast – there is room for all and a market for all. It seems a bit archaic to force consumers into a higher priced and possibly outdated technology when there are so many rapidly changing delivery possibilities.”

There’s a lot of talk about internet radio and DAB, but Pure’s Crawford says: “We think the vast majority of radio listening will be via DAB, with maybe three or four stations coming from the internet. ” Roberts’ Burrage says that internet radio is a matter of consumer choice – and recognising products the consumers are demanding.  “Internet radio is complimentary to DAB radio,” he says, “and there is significant interest in both technologies from both the tech savvy community and the less technologically advanced consumer”.  Roberts has launched the internet-only Stream 201 and the DAB/ FM Stream 202.  Panasonic’s Marshall believes that “The importance of internet radio is not yet highly developed in the general audio market,” while Intempo’s Spofforth thinks that: “It depends what your demographic is and if you can make any profit on tiny volume sales, if you are prepared to subsidise the products in the short to medium term, then this may be the strategy for you. In this climate, however, it may make more sense to consider geographic expansion of Internet radio sales before tackling the UK market.”

Looking to 2009 and new products, Pure is planning to launch a “Sea-change in radio,” with the arrival of DAB radios that will offer music downloading. “If you hear a track you like on the radio, instead of going to iTunes to buy it, you’ll be able to press a ‘buy’ button on your radio and purchase it,” says Crawford. Roberts’ Burrage says: “There will be a particular focus on convergence and eco-friendly products. We will also be introducing more internet models and focusing on making our products more economical for consumers. We’ll be also updating older models such as the RD-50 Revival DAB radio – and we’ll also be introducing new colours and a new collaboration with designer Cath Kidston.” Spofforth hints at a tantalising development:   “After the fantastic introduction of the George Foreman grill and iPod dock, Intempo might consider loading DAB in other commonly used household items, perhaps in partnership with Dyson?” Panasonic’s Marshall says two new key products will be the SC-HC3DB ultra-slim system and the SC-PM38DB speaker system. Both models come with iPod docking stations. Sony plans to offer DAB on all new audio systems in 2009. By the looks of things: there’ll be plenty to tempt would-be DAB customers this year.