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

Contents Introduction to WorldDMB Radio today Business case Critical success factors

WorldDMB – who we are Not-for-profit membership organisation Developed DAB technical standards Promote digital radio (DAB / DAB+) around the world Who is WorldDMB?   We're an international membership organisation. We define and maintain cutting edge digital radio standards We positively influence policymakers and regulators We promote digital radio

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

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

Contents Introduction to WorldDMB Radio today Business case Critical success factors

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

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).

In many markets, FM spectrum is full – difficult to innovate Overloaded airwaves No capacity for new services Difficult to innovate

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 For RX makers it is a key to have a worldwide market This is the only way to offer radios for a solid price and to continue the evolution of radios We are still having too much hesitations, it would be beneficial for the industry to have a common European approach, DAB/DAB+ implementation everywhere, consolidated definition of radio types (e.g. WorldDMB profiles) and similarity on the transmitted information and data

Four core markets: UK, Norway, Denmark and Switzerland Sweden Germany France Spain Italy Switzerland NL Bel Denmark Poland Czech Austria Ireland Portugal Slovenia Slovakia Hungary Established markets For RX makers it is a key to have a worldwide market This is the only way to offer radios for a solid price and to continue the evolution of radios We are still having too much hesitations, it would be beneficial for the industry to have a common European approach, DAB/DAB+ implementation everywhere, consolidated definition of radio types (e.g. WorldDMB profiles) and similarity on the transmitted information and data

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 New markets For RX makers it is a key to have a worldwide market This is the only way to offer radios for a solid price and to continue the evolution of radios We are still having too much hesitations, it would be beneficial for the industry to have a common European approach, DAB/DAB+ implementation everywhere, consolidated definition of radio types (e.g. WorldDMB profiles) and similarity on the transmitted information and data

Several potential markets UK Norway Sweden Germany France Spain Italy Switzerland NL Bel Denmark Poland Czech Austria Ireland Portugal Slovenia Slovakia Hungary Established markets New markets Potential markets For RX makers it is a key to have a worldwide market This is the only way to offer radios for a solid price and to continue the evolution of radios We are still having too much hesitations, it would be beneficial for the industry to have a common European approach, DAB/DAB+ implementation everywhere, consolidated definition of radio types (e.g. WorldDMB profiles) and similarity on the transmitted information and data

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 New markets Poland? Potential markets For RX makers it is a key to have a worldwide market This is the only way to offer radios for a solid price and to continue the evolution of radios We are still having too much hesitations, it would be beneficial for the industry to have a common European approach, DAB/DAB+ implementation everywhere, consolidated definition of radio types (e.g. WorldDMB profiles) and similarity on the transmitted information and data

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

DAB / DAB+ radios now mass market Prices from $29 Traditional look with modern technology

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

Automotive brands offering DAB – increasingly as standard

Contents Introduction to WorldDMB Radio today Business case Critical success factors

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

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

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

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

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

Specialist speech services – e.g. sports or archive Science Drama & comedy Germany: live football Up to 5 matches simultaneously Germany: higher education for younger audiences UK: archive from the BBC

Strong brands – key to success Germany launched DAB+ with services going on air nationwide in August 2011. New services continue to go on air and both public and private stations are available on the nationwide network. Germany’s public service financing committee, the KEF, provided funding which allowed public broadcaster Deutschland Radio, to build out a national digital radio network using DAB+ technology. The Deutschland Digital Radio was created to co-ordinate the efforts of all stakeholders; the stations on the national multiplex, the regional public broadcasters (ARD) and Deutschland Radio (the national public station). Five Working Groups were created to guide all areas of digital radio development and roll out. Areas covered include: networks, products, marketing and advertising, traffic and travel and automotive. A marketing campaign in all media is being undertaken by broadcasters, manufacturers and retailers. This has been launched to inform the public and retail staff working in high street shops about the advantages of purchasing a digital radio. There are currently 27 transmitters covering the major towns, cities and motorways. Population coverage from 1 August 2011 is approximately 40 million people with planned coverage reaching 99% of the population by 2014. 19 new transmitters are going on-air in 2012 to extend this coverage, whilst another 40 new or existing transmitters will extend the current network in 2012-2013. (Next Slide)

Potential to extend geographic reach Energy on FM Energy on DAB+ Hamburg Berlin Nuremberg Stuttgart Munich Rhein-Main

Extend the brand portfolio Analogue and digital Digital-only services

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

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

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

Sponsorship opportunities – youth audiences

Branded stations take sponsorship to new level Branded channels – aimed at housewives target audience

Pop up stations – for range of events

Sponsorship opportunities – music tour & digital radio station

Sponsorship opportunities – music tour & digital radio station

Colour screen devices create new opportunities Revo Pixis When haptic and visual impression is important

Colour images for additional information

Hybrid radios with Bluetooth connectivity – from €59 John Lewis Spectrum Duo

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

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

Contents Introduction to WorldDMB Radio today Business case Critical success factors

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

Policy and regulatory framework 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)

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

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

Devices available from wide range of suppliers

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

TV ads, heavy FM promotion and device give-aways Source: BBC and Bayerische Rundfunk

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

Automotive – work with manufacturers to fit DAB+ as standard Educate local importers and dealers consumer benefits coverage plans long term commitment to DAB+ Work with international partners

Key to success is collaboration Policy makers and regulators Broadcasters Network operators Devices Retailers Automotive Consumers Industry stakeholder body

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

In UK, 45% of new cars have DAB as standard 35% 22% 10% 4% Q1 10 Q4 10 Q1 12 Q1 13 Q1 14 Source: CAP/SMMT