Tuning in to Satellite and Digital Radio

Despite its infancy, 47 percent of Americans aged 12 and over are aware of satellite radio services – translating into over 100 million people within the current U.S. population (2000 U.S. Census figures). TEMPO, Ipsos-Reid’s digital music research study, found that this awareness can yield the prediction that as many as 25 million Americans will be paying for this service by the end of the decade.

These figures could mean good news for XM and Sirius Satellite Radio, big players in this new industry who have spent a combined estimated $1.5 billion on a complex satellite broadcast network. Requiring the purchase of satellite-enabled audio hardware and a monthly subscription fee for operation, the services offer both original and pre-packaged digital music, news, sports and talk programming that can be heard anywhere in the U.S. in cars and home radios. The services promise superior sound and transmission quality, and fewer or no commercials.

“Whether the currently strong awareness levels will translate into subscriptions for both XM and Sirius remains to be seen, but certainly the pump has been primed”, said Matt Kleinschmit, senior research manager for TEMPO. “Clearly, many in the general population – music enthusiasts in particular – are aware that this new radio service exists, and as new automobiles with satellite-enabled audio systems move from the showrooms to the streets, many may become de-facto subscribers through bundled leasing agreements and financing plans.”

The data, collected during the last week of April 2002 from 1,113 U.S. respondents, revealed:

• 60 percent of 18 to 24-year-olds, and 57 percent in the 25 to 34 age group report they have heard of these new radio services.
• 47 percent of both 12 to 17 and 35 to 54-year-olds, and 33 percent of Americans aged 55+ indicate they are aware of this recently launched technology.
• 59 percent of U.S. men aged 12+ claim to have heard of this new radio broadcasting system, compared to only 34 percent of American women.
• 53 percent of the respondents who have purchased two or more pre-recorded compact discs, and 49 percent of who have purchased one compact disc in the past 6 months report being aware of satellite radio, compared to only 35 percent of Americans who have not purchased any compact discs in the past 6 months.

“Despite the relatively recent roll-out of satellite radio services in the U.S., awareness levels are surprisingly strong among the general population, especially among men in their 20s and 30s”, said Kleinschmit. “Moreover, this awareness exists despite the fact that there’s only one provider fully launched and heavily advertising. With Sirius scheduled to be fully operational nationwide in early-July, we anticipate further gains in the awareness levels regarding the technology in general-as well as regarding the individual providers-as competition for consumers’ attention and wallet increases.”

In-Stat/MDR research regarding digital audio broadcast (DAB) and digital audio radio services (DARS) services is equally optimistic. The company speculates that the services will finally gain increasing acceptance in the United States and abroad within the next 5 years.

Unlike digital satellite radio, DAB can be received on a non-fixed, as well as a fixed basis – for instance, both in-car and by portable receiver. There are now more than 22 different DAB receivers commercially available, having been on the market since 1998.

WorldDAB estimates that over 284 million people around the world can now receive more than 400 different DAB services. Services or pilot projects are running in many countries, and the BBC has a transmitter network that covers 60 percent of the population.

“Major markets like the U.K., Germany and Canada are starting to show how vital digital is in adding more value to radio service as DAB is inspiring a whole renaissance of new programming choices,” says Michelle Abraham, a senior analyst at In-Stat/MDR.

“In all geographical regions, there are hurdles that will need be overcome in order for this technology to really take hold in the consumer market,” says Abraham. “Manufacturers will need to produce receivers at a price that is desirable to the consumer, the availability of receivers will have to broaden, and the transmission system must provide a wide coverage area. In addition, interoperable receivers that pick up all digital radio systems will have to be developed.”