Tuesday, 1 December 2009

DAB radio UK sales: 10m in 10 years is “an incredible achievement”?

The Digital Radio Development Bureau [DRDB] published a press release yesterday trumpeting the “incredible achievement” that 10 million DAB receivers had been sold to date in the UK which, it said, “proves that digital radio is here to stay”. The press release was notable not for what it said, but for what it omitted.

Ten million radios sounds like a big number until you realise that this has been achieved over more than a decade of DAB product sales in the UK. There are 51.3 million adults (aged 15+) in the UK. So, averaged over the decade, roughly one out of every fifty adults bought a DAB radio each year. Not so impressive.

Revisit the DRDB’s own forecasts for DAB receiver sales. In 2004, it forecast 13.15m DAB radios would be sold by year-end 2008 (the reality was 8.53m). In 2005, it forecast 19.96m to be sold by year-end 2009. In 2006, it forecast 17.2m sold by year-end 2009. In 2007, it was too embarrassed to revise its year-end 2009 forecast (but even its year-end 2008 forecast of 9.16m was overstated, as the reality was 8.53m). In 2008 and 2009, understandably, the DRDB did not publish its forecasts. The DRDB forecasts of the very consumer market in which it is specialising have consistently been shown to be wildly inaccurate.



The DRDB press release also claimed that “for the past three years, sales of digital radio sets have remained solid”. ‘Solid’ is an interesting choice of word to describe the present situation of declining sales. Sales in Q2 2009 were the lowest in two years and were down 6% year-on-year. Sales in the previous two quarters, Q1 2009 and Q4 2008, were also down 1% and 10% respectively year-on-year. Three consecutive quarters of negative sales growth can hardly be described as ‘solid’.



As the graph above shows, the rot set in at the end of 2005, when year-on-year DAB radio sales growth fell from triple to double digit figures. Both 2006 and 2007 included quarters of single digit growth. Now, in 2009, growth has been negative all the way. This is no temporary blip caused by the recession. The writing was already on the wall by 2006 – the DAB party is over. Now we are merely waiting for the last few guests to leave.

The other remarkable statement in the DRDB press release is its satisfaction that sales of “all categories of analogue radio showed significant decline”. As I have pointed out previously (see graph below), sales of radio receivers generally are in long-term decline in the UK. Is this a fact that a stakeholder within the radio broadcast industry should be crowing about? It’s like two passengers on the Titanic fighting over which has the bigger cabin – does it really matter if the whole ship is slowly going down?



It should be pointed out that the DRDB data excludes sales of mobile phones, despite the fact that the majority of current models sold in the UK include FM radios, whilst not one model includes a DAB radio. More than 30m mobile phones were sold in the UK in 2008, which puts the 2m DAB radios sold in stark perspective (see recent blog entry).

Also, it should be pointed out that the vast majority of what the DRDB calls ‘DAB radios’ on sale in the UK also incorporate analogue FM. It is increasingly difficult to find a DAB-only radio to purchase in UK shops. This renders the DRDB’s proclaimed digital versus analogue victory completely hollow. For every ‘DAB radio’ sold that the DRDB hopes will automatically lead us to some kind of digital heaven, in probably 90%+ of purchases, yet another FM radio is also being added to the millions already in UK households (see recent blog entry).

Finally, recall that 8m analogue radios (without DAB) are still being sold annually in the UK. Now add to that the 30m mobile phones purchased, most of which include FM radio. Then compare it with the “incredible achievement” of 2m DAB radios sold per year, most of which include analogue radio anyway. The future of radio is looking less and less like a DAB world. Rather, analogue radios are probably multiplying faster in the UK marketplace than they have ever done, thanks to mobile phone manufacturers. This is good news for radio, bad news for investors in DAB.

These facts might not conveniently fit the DRDB ‘story’. But they are the facts.

3 comments:

HD Radio® Farce said...

Grant, we can beat that incredible achievement - LOL! In the US, the first HD Radio sold was back in January 2004. AT MOST, iBiquity has probably sold 1 million HD radios, with a highly-likely 50% return rate, because HD Radio simply doesn't work well. I think that a very good estimate of the number of HD radios in the General Public is about 500,000, and probably a good percentage of those are in the hands of broadcast industy folks.

dp said...

The Government needs to see and understand these charts of reality and illusion.

Not to mention Industry.

And, Public.

dp said...

Government needs to see and understand these charts of reality and illusion.

Not to mention Industry.

And, Public.