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CEA Survey: HD Radio Beats Satellite In Consumer Interest

Satellite-radio ownership will grow rapidly this year and likely into the next, but over the long haul, consumers are far more interested in owning an HD Radio that receives digital AM and FM broadcasts, a CEA consumer survey found.

A total of 48 percent of the adults surveyed in July indicated they are “very interested” (13 percent) or “somewhat interested” (35 percent) in buying an HD Radio receiver for the car at some point in the future. In contrast, only 20 percent of consumers said they are “very likely” (4 percent) or “likely” (16 percent) to buy satellite radio sometime in the future.

In the short term, however, satellite radio has the edge in consumer awareness, product availability and content availability, and those factors are contributing to strong satellite-radio demand, the study said. Within the next year, 6 percent of adult consumers surveyed said they plan to buy satellite radio. At the time of the survey, 3 percent of adults already own satellite radio.

In contrast, CEA said, although “a significant number of consumers are standing on HD Radio’s doorstep, an equally significant number … are unaware of HD Radio and the value proposition it offers.” The results “strongly suggest HD Radio’s need to build awareness and cultivate mindshare among consumers,” CEA continued.

Underscoring the lack of awareness, the survey found that 58 percent of consumers were unaware of HD Radio at the time of the survey. Only 35 percent could correctly identify the proper explanation of the technology from a list of descriptions. “These results were not surprising, given the present limited availability of compatible products and the few radio stations broadcasting HD Radio signals,” the study said.

The results, the study continued, “make it clear manufacturers and retailers need to escalate their consumer education efforts surrounding HD Radio for the technology to gather momentum. But the critical mass can only be achieved if greater numbers of broadcasters upgrade their signals to support HD Radio.”

Consumers’ interest in HD Radio is high, the study speculated, possibly because “HD Radio represents an upgraded radio listening experience of the stations consumers already tune in and enjoy.” The study also said the lack of a subscription fee is “another plausible explanation.”

Awareness of satellite radio is so high that 73 percent of the surveyed consumers said they were aware of the technology before taking the survey. A total of 81 percent were able to correctly identify the proper explanation of the technology, too.

Although satellite-radio demand is ramping up, the study continued, 31 percent of consumers said they would never buy one. Of those consumers, 39 percent cited subscription fees as the reason. Another 30 percent of the uninterested consumers said they were happy with their current radios, and 16 percent said they don’t listen enough to radio for the service to be valuable to them.

Overall, however, CEA forecasts “robust” aftermarket satellite-radio sales for the car in 2004 and “possibly” in 2005 because satellite radio is entering its “prime adoption phase.” The survey found that most consumers wait for a technology to become established before buying it, and 46 percent hold off for one to two years before buying. “Based on this adoption curve, satellite radio is entering its prime time for growth and consumer adoption,” the study said.

Much of that growth will occur in the home, the study also indicated. It pointed out that only 2 percent of consumers surveyed had installed satellite radio in the car but 3 percent own satellite radio. The numbers indicate growing penetration in the home through transportable satellite tuners that can be connected to home stereos through docking stations.

Underscoring interest in listening to satellite radio outside the car, the survey found that 24 percent of consumers would most likely listen to satellite radio in the home if they had satellite service and a radio that could set up almost anywhere. Sixty-three percent said they would most likely listen in the car; 6 percent said at work; 3 percent said while walking or jogging; 1 percent said while rising a bike; and 1 percent said while exercising at a club.

In another finding, the survey determined that 10 percent of cars equipped with an OEM satellite radio had an active subscription.