Question marks over the future of Digital Radio

Heavy losses and poor returns on investment are threatening the future of digital radio channels.

At first I thought a couple of birds had managed to get into the tutor2u office. The sound of birdsong was unmistakable, so I assumed we had left the window open. I opened the office door and there it was, sat on the desk in front of me…

... a lesser silver-striped Digital Radio, tuned into Birdsong, one of the most popular channels on digital radio (I have since discovered).

We’ve bought three digital radios for the tutor2u office - one for each room. And popular they are too (if you’ve ever called the office, you will know what I mean). We are not alone either. Two million DAB radio sets were sold during 2007 in the UK, half of them in the run-up to Christmas. So the installed base of digital radios is growing. But has this growth come too late for the digital radio broadcasters?

An interesting article in the Telegraph today provides a really useful update on the strategic challenges facing digital broadcasters.

There are many angles to the story that are relevant to business students, including:

Startup losses - the costs of launching and operating digital stations whilst broadcasters wait for the audience to build (and therefore attract advertising)

The distribution options available for digital content - the article picks up on the increasing consumer preference for listening to digital stations via Freeview and Broadband Internet

Market saturation - too many channels chasing too few listeners.