April 29th, 2013

New York to Vegas: HD Radio™ Perspectives from the NY Auto Show and NAB

Blog Category: 
Radio's Digital Future

...Sometime Slow and Steady Wins the Race

April has kept me busy, and I wanted to share some observations from the floor of the New York Auto Show and the NAB Show. What I heard and saw made me more enthusiastic than ever about HD Radio progress and the technology’s ability to help broadcasters compete in the 21st century. Radio broadcasters have worked long and hard on the over-the-air digital upgrade. They should be proud of what they have accomplished and excited about the money-making potential of digital broadcasting.

The New York Auto Show is one of the nation’s biggest and most important car showcases. All the major manufacturers have splashy press events and show their new vehicles and latest concepts. For a car enthusiast like me, it’s heaven. I spent a full day checking out the latest and meeting with our auto partners.

Many broadcasters might be surprised that for most automakers today, AM/FM radio means HD Radio Technology. 33 different automakers are building the technology into their cars; Dodge and Honda made first time announcements at the NYAS. There are over 170 different vehicle lines featuring the technology, and it is standard equipment on more than 80. Walking the floor, I found HD Radio Technology prominently featured in most every booth.

That's a good thing, because my discussions with auto executives confirmed that HD Radio Technology is fundamental to keeping broadcast radio competitive in cars. And we all know how critical in-car listening is to our industry.

I and others have written much about 'the battle for the dashboard', and that battlefield was clearly on display at the NYAS. Most new cars come with big color screens and include a wide array of digital information and entertainment sources: Pandora, iHeart or other internet radio offerings, satellite radio, iPod and USB ports, Bluetooth connectivity for smartphones, hard disk storage for music libraries, and social media, all at a driver’s fingertips.

The encouraging news is that HD Radio Technology is in all these packages and takes advantage of their capabilities. HD Radio features literally 'fill the screen' and look as good as or better than competing services. Look at the nearby screen shots to see the new services and visuals coming from digital radio stations. With station frequency, call letters, artist and song title and album art or station and advertiser logos, radio has the look and feel consumers now expect from their media. With additional HD2 and HD3 channels, they get the expanded listening choice they want. Services like iTunes Tagging, which stores song information for later preview and purchase, give them a connected experience.

General Motors

Lexus/Toyota

Volkswagen

The messages from the NYAS could not be clearer: the competition in dashboards is intense, listeners have multiple services vying for their time and attention, HD Radio Technology has been embraced by automakers and is essential to maintain radio’s relevance and competiveness in the digital dash.

The latest HD Radio application, free over-the-air traffic updates, will provide even more value for consumers and further entrench broadcast radio in cars. Automakers are excited to offer detailed traffic information, broadcast using HD Radio bandwidth, and plot it on car navigation screens. Toyota, Lexus and Mitsubishi are rolling out the service and Garmin is selling it heavily in its Nuvi Personal Navigation Devices (PNDs). Several more automakers are on the way.

We highlighted traffic services in our booth at NAB and generated good buzz. In addition to further securing broadcast radio’s place in the dashboard, they also ring the cash register for the industry. While the service is free to consumers, Garmin or the automakers pay stations a per-unit fee for broadcasting the information. As millions of units are shipped, those fees are adding up.

I had several broadcasters at NAB tell me that they were seeing checks roll in from the Broadcast Traffic Consortium (BTC), which has built the network that delivers the Garmin service. It was one of several HD Radio items I heard throughout the show:

“I just got an HD Radio receiver in my new car (or have had it in a bunch of rental cars), and now it makes sense to me.”

“People are calling the station when my HD2 goes down, that didn't happen a year ago.”

“I am getting real ratings and making real money on the translator I am feeding with my HD2 channel.”

“I am getting bigger and bigger checks from the BTC.”

Two things always make broadcasters sit up and take notice: money making opportunities and feedback from their listeners. Both are becoming commonplace with HD Radio stations, driven by the millions of HD Radio receivers being sold, most for in-car listening. What we at iBiquity have seen in our HD Radio receiver sales numbers, broadcasters and consumers are seeing in their cars and at dealerships. Simply put, it’s huge growth.

HD Radio promotion heats up.

As sales increase, we are seeing some exciting HD Radio consumer promotions from receiver manufacturers. Take a look at two of my favorites. Garmin has branded their HD Radio delivered traffic service ‘HD Digital Traffic’ and has been pitching in widely. I was happy to see the ad on the back cover of my Sports Illustrated issues recently. They ran in USA Today as well. And I can’t go to New York without stopping in Times Square to see the JVC electronic billboard which features their HD Radio receivers. It’s right next to the NASDAQ building on 43rd Street, check it out.

Some recent sales history:  In 2010, our partners sold 1.8 million HD Radio receivers. In 2011 that number was 2.2 million; last year it was 3.9 million. That’s 50% annual growth rate, and we forecast similar growth for this and the next several years. I am not aware of anything in broadcast radio that is growing that quickly.

There are now over 12 million HD Radio receivers in the market. 80% of those radios are in cars, either factory installed or aftermarket car radios. With that installed base and continued spectacular growth in the most important radio listening segment, broadcasters are paying close attention. That’s what I heard over and over again at NAB.

The growth in receiver sales and broadcaster opportunity will continue to accelerate rapidly. We know, we are working with every auto manufacturer. That’s great news for radio as it battles for its share of listener time and attention and advertiser dollars.

This success is the result of a decade of hard work and perseverance by the industry. Radio broadcasters did something quite extraordinary with their HD Radio commitment. They made big investments in upgrading their stations when they knew the payoff, which we are seeing now, was years away. The typical ROI calculation would not have justified the effort. It took foresight, vision, courage and strategic commitment on the part of radio’s leaders to make it happen.

And history is proving them absolutely correct. The competitive digital landscape they foresaw has developed. The HD Radio system has seen continual innovation from the initial sole benefit of digital quality sound to today’s broad mix of valuable features. Most importantly, HD Radio Technology is proving to be the competitive necessity and real money maker it was intended to be. The NYAS and NAB displayed all these points. You can go to your local car dealer and see the same for yourself.

We recently celebrated the tenth anniversary of the first HD Radio station signing on. Ten years is a long time, and we certainly are working every day to accelerate the HD Radio rollout, but experience shows these big media transitions take time.

For you radio historians, consider this: the first FM station went on the air in the US in 1941 (in Nashville if Wikipedia is right). Ask yourself this: where was FM in 1951? 1961? 1971, for that matter? Not as far along as HD Radio Technology is today. And that’s an important and good result for all radio.

Thanks for reading, and let me know what you think: email to thoughts@ibiquity.com. I read, consider and try to respond to all of them.

Bob Struble
Columbia, MD 
April 2013