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Broadcast Radio Under Threat from Perfect Storm of New Tech

Automotive Radio Market Analysis and Commentary

As streaming music services continue their ascendance, attracting increasing levels of consumer spend, and the automotive industry explores the car connectivity roadmap, traditional broadcast radio is coming under serious threat. That’s according to a new automotive audio report from Futuresource Consulting.

“Broadcast radio currently holds a position of dominance in the car,” says Mike Fisher, Associate Director at Futuresource Consulting. “What’s more, around half of all radio content consumption takes place in the car, acting as a safety net for the entire radio industry and ensuring its continued profitability. As a highly effective, stable and low-cost means of delivering continuous content on the move, radio has a lot going for it. But storm clouds are gathering and radio is now under extreme pressure to innovate and reinvent, or it will be pushed out of the driving seat.”

A Rising Threat to Radio

Changing content consumption trends and extensive in-car technology advancements have been reshaping the automotive opportunity. Content as a whole, whether movie franchise, music, TV or newspapers, is becoming increasingly personalised and interactive, resonating with consumers, particularly the younger generations. At the same time, there has been rapid growth in the uptake of mirroring solutions such as CarPlay and Android Auto, with key music streaming platforms widely integrated and increasingly targeting direct car OEM relationships. The use of tethered smartphones for streaming is widespread, and in 2018, Spotify alone had close to 100 million paid-for service subscribers. With in-car connectivity expected to develop significantly in the coming years, the opportunity for streaming music is colossal.

By 2023, 70% of cars sold globally are expected to have SIM connectivity built in. Combine this with the deployment of 5G, which will give consumers faster and more efficient data access, and broadcast radio is facing a perfect storm. Autonomous driving is still a long way off, with initial level 5 rollouts targeting consumers expected around 2025 and limited adoption through 2025 to 2030, but in-car entertainment trends are already poised for transformation.

The Future is Waiting

“Non-linear content is available, consumers have the ability to play it safely in the car, and connectivity is on the rise,” says Fisher. “Despite this, a recent Futuresource consumer research study conducted in the USA, UK, Germany, Japan and China shows that 58% of consumers still listen to traditional AM/FM, DAB or digital radio somewhere, for at least one hour every week. When it comes to the car, Futuresource research shows that traditional ways of listening to audio still dominate, built-in radio is dominant, with CD the second most popular in all countries apart from the USA. Integrated streaming is relatively limited to date, but smartphone utilisation widespread. There is still a window of opportunity for radio.”

Can Radio Survive?

“With the battle lines being drawn between personalised content and linear delivery, radio needs to innovate and it needs to respond quickly,” says Fisher. “Head units in new cars, as well as aftermarket offerings, are integrating leading music streaming and internet radio apps.”

However, radio can rise to the challenge, bolstered by the innovation opportunities of digital radio. With the use of a digital signal comes the ability to provide metadata, enable search, and deliver on-screen detail such as album art and song-specific information. DAB can also deliver local traffic information to the consumer, free of charge. It also provides possibilities for a wider range of channels, giving flexibility to broadcasters to expand their portfolios. And the rollout of digital radio services is accelerating. HD Radio is well established in the US and DAB is gaining momentum in Europe and Australia. In addition, the EECC directive requires all new car radios in the EU to be capable of receiving digital terrestrial radio by the end of 2020.

“Many radio broadcasters have been slow to transition to digital delivery,” says Fisher. “They face a raft of challenges, including changes to traditional business models and major infrastructure update requirements. But if these organisations don’t embrace the future and innovate, they could become the next Blockbuster Video. However, with the right technology stack and a solid platform for metadata, radio can evolve and incorporate new features that matter to consumers. Skipping tracks, tagging content for consumption later, perhaps on a different device, and providing live travel and news updates on demand, all packaged up with HD graphics. And as voice assistants are likely to become a fundamental part of the cockpit interface, so radio stations need to ensure they structure their metadata to fully exploit and integrate with voice.

“There is no doubt that the automotive industry is on the move, heading for increasingly personalised experiences. For radio to stay in the game it needs to innovate, adding to its existing strengths with new features and capabilities that capture the attention of consumers.”

The new Futuresource automotive audio report provides a detailed analysis of the key trends and developments in the automotive audio landscape, hardware market sizing and forecasts, audio system feature developments, voice assistant trends analysis and a review of the impact of streaming on radio.

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