Advertising will drive growth in radio revenue. The continued recovery of advertiser confidence since the economic downturn will see radio advertising revenue extend its share of global total radio revenue from 75.3% in 2014 to 75.8% in 2019. With public radio licence fees progressively contributing relatively less, advertising will be the key driver of global growth.
The US remains dominant, but fast-growing international markets are gaining ground. The US dominates the global radio market with 44.6% of all revenue but growth is now occurring more quickly in other markets. The combined effect of the continued maturation of the US market and the accelerating growth of large markets in other regions will see the US lose further global share, dropping to 43.2% by 2019.
Connected devices emerge as a mixed blessing... By 2019, smartphone connections will have risen to 3.85bn, from 1.92bn in 2014, accounting for 56.0% of all mobile phone connections. Such devices will give more consumers greater opportunity to listen to radio on the go, but simultaneously expand opportunity and drive competitor services.
…While the digital radio platform will transition to listening on mobile Internet devices. Only a handful of radio markets have an established dedicated digital radio platform, though some progress is being made and trials are in advanced stages in many markets. But competition from the accelerating use of portable Internet devices—mobile Internet subscribers are forecast to comprise 58.5% of the population in 2019—will give consumers greater access to streaming audio alternatives to radio, as well as more choice in accessing available radio content. Broadcasters must ensure they are making new digital radio platforms available to address changes in audience behaviour.
China and India will surge, but Japan falls back. Markets such as China and India will be some of the most significant revenue growth contributors in the five years to come, with total radio revenue CAGRs of 8.7% and 8.9%, respectively. The growing middle classes in these markets and their spending power will be key drivers of radio advertising revenue. By contrast, Japan, known for pioneering technology and one of the most significant music markets in the world, will suffer a -3.5% CAGR fall in total radio revenue to 2019. Key to Japan’s decline is a shrinking, ageing radio audience, with younger consumers quickly turning to Web and app alternatives such as streaming music services.
Evolution of in-car content consumption is a concern to broadcasters. Although traditional radio broadcasting still dominates the in-car environment, interactive dashboards are beginning to gain traction. Currently, around 8% of US consumers have an interactive dashboard in their car. Broadcasters have some time to prepare before such features become mainstream, but broadcasters’ revenue could migrate to other online media offerings.