Digital Upgrade: Report Card Part 1

The new Government will be making an announcement tomorrow on the digital radio upgrade. There’s an assumption that they’ll bascially endorse the work that went into the Digital Economy Bill (no great surprise as all political parties supported the radio clauses).

So, a quick recap, the DE Act legislation allows the Goverenment to give two years notice to FM (well, BBC/Commercial FM operators who have TSAs over 200k or so) at the point where 50% of UK radio’s hours are ‘digital’ (that’s DAB, Digital Television and Internet combined).

The 2015 date that people talk about is basically an assumption that we can hit this 50% by 2013 which will then kick off the two-year count down process.

Whenever anybody asks about whether this date is achievable, the person puts on a very serious face and says “it’s a challenging deadline, but something we’re very much striving towards”.

It is a tough deadline but I think it’s something worth shooting for. My thought is that if we don’t hit it, we’re likely to be only a year behind or so.

When people say that this is clearly unachievable the number they usually quote is the one RAJAR publishes that shows how we’re doing digitally. At the moment 24% is ‘digital’ compared to 20.1% at the same point in 2009. In other words, whilst it’s increasing, is it fast enough?

Having popped open Excel and added 19% growth to the number each year, we’d get to 48.8% in 2014 and break through the 50% point in 2015. Happily just after an election, so the ‘new’ Government can (probably a little more easily than pre-election) hit the two-year countdown button should they wish.

However, it’s far more complicated than that and there’s some spanners that could potentially reduce the time till the button’s pushed, or indeed extend it.

You can split radio listening into lots of different groupings – i’m going to look at the four key ones:

* National Commercial
* National BBC
* Local Commercial
* Local BBC

Tomorrow we’re going to see how these groups are doing on their journey to the digital upgrade….

4 thoughts on “Digital Upgrade: Report Card Part 1”

  1. Interesting post – look forward to the others.

    Personally I’d be cautious about using the latest quarter’s YOY growth figure of 19% to predict future growth.

    My reading of historical data for the last few years is that digital radio growth has being following a fairly linear path. In other words, the percentage growth has fallen slightly each year as a comparable number of new listeners (and hours) is added as in the previous year.

    – Digital radio’s share of listening has typically gone up by an average of about 3 percentage points per annum (this trend is more or less apparent for about the last 5 years, although it depends slightly on which quarters you compare).
    – Annual DAB set sales (which drive the majority of the increase in digital listening hours) have shown pretty much no growth since 2007, having stuck at about 2.0 – 2.2m p.a. in each of the last three years. In other words, new opportunities for digital radio listening are being added to the market, but the rate at which this occurs is not accelerating.

    There is some evidence that 2010 may be different. Firstly, there are grounds to expect DAB set sales to receive a one-off boost in Q2 2010 – perhaps of 50% or more – due to the Radio Amnesty promotion. Secondly, digital’s share of listening made a big jump in Q1 2010. Whether this is part of a trend, or just a blip (like the fall in digital’s share recorded in the previous quarter), may not be clear for several more quarters.

    It’s hard to make an accurate forecast with so little forward visibility, but my more cautious reading is that switchover will be delayed by more than just a year or two. In other words, the digital radio growth curve will continue to look rather more linear than exponential.

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