The Bridge Ratings Report - The Impact of Wireless Internet |
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For Immediate Release:
Much has been written about the potential of Wireless Internet and the flexibility that comes with more wireless devices and increasing Wi-Fi locations. But what about the impact on traditional radio listening of Wi-Fi or its wide-area cousin, Wi-Max, once the technology is available in-car? During July/August 2009, Bridge Ratings updated our broad-based national study of this question by interviewing consumers and device and auto manufacturers to better understand the implications of wireless Internet and the availability of Wireless Internet Radio. Today 56% of Americans have accessed the internet wirelessly on some device such as a laptop, cell phone, MP3 player or game console. Wi-Fi locations are becoming common across the U.S. making wireless Internet access a comfortable reality for millions of consumers. Of the estimated 168 million users of wireless access technology in the U.S., 33% or 56 million access Internet radio at least once a week. In fact, 21% of those accessing the Internet via wireless technology use it to listen to music. The number of Internet radio listeners accessing wirelessly will grow to 77 million by 2011 as wireless technology penetrates the average U.S. lifestyle.
ABI Research forecasts that the total number of Wi-Fi-enabled consumer electronics devices will grow from just 40 mln shipped in 2006 to nearly 249 mln in 2011. Mobile WiMAX customers will grow at an annual compounded rate of 64% between 2010 and 2012, when telecoms embrace WiMAX as a fixed wireless broadband service, according to Pyramid Research. Wireless Internet use in-car faces hurdles based on Wi-Max technology development, how quickly auto manufacturers are able to equip new cars and what type of early adopter consumer will want the technology. In our study of 2500 persons 16+ we asked consumers who define themselves as "innovators" or "early adopters", how likely they would be to buy a car or equip a current vehicle with a wireless Internet device. Because manufactures remain uncommitted at press time to establish a date to introduce this technology, growth projections are shown in the chart below for year one of availability and beyond.
How will this increasing number of Internet radio listeners affect weekly listening to traditional radio?
By year 5 of in-car Wi-Fi acceptance, traditional radio can expect to see the amount of time spent listening to fall below 19 hours a week and by year 8 when we project that more than 23% of the U.S. public will have adopted wireless Internet technology in-car, weekly time spent listening to traditional radio will fall below 18 hours per week. What about satellite radio? Satellite radio has found its greatest audience in-car but has the most to lose with wireless Internet radio reception. This study as well as previous Bridge Ratings studies conducted for the satellite radio industry, show that satellite radio subscribers consumer satellite radio at a far greater weekly rate than do listeners to traditional radio. As wireless in-car becomes more accepted, weekly time-spent-listening to satellite radio will also be impacted.
According to our sample, satellite radio should experience a more severe drop-off in weekly time-spent-listening due to the wide variety of programming available on Internet Radio and the lack of comparable subscription expense. During the focus groups that accompanied this study, monthly subscription cost was of lesser concern than the quality and variety of available content. It was generally assumed that the monthly cost of satellite radio and in-car Wi-Fi reception of Internet Radio would be comparable. Yet, those who currently subscribe to satellite radio expected to listen less if they had wireless Internet radio in their cars or they would cancel their satellite radio subscription. Will In-car Internet Radio Hurt Traditional Radio Revenues? Bridge Ratings expects that traditional radio revenues will be enhanced by Wi-Fi Internet Radio only if the radio industry vastly improves its advertising sales techniques and commits to dedicated Internet radio sales teams. This is the model that is working best now for traditional radio and in order to off-set other ad revenue attrition, traditional radio can recoup and, perhaps, exceed the amount lost if the industry is more aggressive in this area. With dedicated sales teams experienced in selling the Internet, traditional radio can expect to see a return to 3-4% revenue growth after consumer acceptance of in-car Wi-Fi surpasses 7% of the population (see chart):
By the ninth year (2017) of market availability the combination of natural market growth (1-2% per year) and a more effective effort at selling its Internet radio channels, traditional radio revenues will return to over $18 billion. Absent a significant revenue-growth event, terrestrial radio's revenue declines in 2009 will take ten years to return to pre-2009 levels. Final Thoughts The availability of wireless Internet in-car poses a signficant threat to traditional as well as satellite radio. This study projects that the growth of Wi-Fi in-car should reach more than 50% of the U.S. population after nine years of market availability. It is important to note that adoption by the masses of new technologies is often slower to penetrate the mass market. New technologies take time to be widely adopted and it is important to note that innovators and early adopters who jump on new technology often receive an inordinate amount of press which quickly raises awareness of the adopted technology. The adoption of in-car Internet service and the spread of Internet radio across all consumer types will begin to be a factor late in the second decade of the 2000's. Diffusion* of technology through to the mass market, rather than the innovation ultimately determines the pace of acceptance and this is the reason for the generally long growth pattern you see in this report's projections. *Diffusion is the cumulative result of a process whereby varying consumer types (innovators, early adopters, early majority, late majority and laggards) sample, compare and decide upon use of the new technology over long periods of time. Nonetheless, the results of this study show that mainstream consumers are currently using Wireless internet in-car and current listeners of Internet radio will continue to adopt the technology when as it becomes more pervasive. Methodology: Random Digit Dialing + Internet polling For more information or questions, contact Dave Van Dyke at Bridge Ratings. dvd@bridgeratings.com or 888.790.1102.
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