PwC Finds U.S. World's Largest Radio Market

RADIO ONLINE | Wednesday, June 7, 2017

According to PwC's Global Entertainment and Media Outlook 2017-2021, the U.S. remains the world's largest radio market with total radio revenue of $21.9 billion in 2016, accounting for 49.6% of total global radio revenue. As evidence of the sheer scale of the U.S. radio market, PwC found it generates more than three times the radio revenue of the entire Asia Pacific region and more than 15 times that of Latin America.

Radio advertising is the largest revenue source, accounting for 81% of total radio revenue in 2016. Within the sector, traditional terrestrial broadcast radio advertising remains dominant (92%) although online advertising, whether on terrestrial or satellite radio, continues to make inroads. Satellite radio advertising revenue derives from SiriusXM, the sole dish operator in the market, but only makes up a small proportion (1%) of the sector. The bulk of SiriusXM's revenue comes from subscriptions (97%), which are expected to hover around that ratio for the next five years.

Total radio revenue (advertising plus satellite subscriptions) grew by 2.6% in 2016, slightly down on 2.8% in the previous year. This dip was reflected in radio advertising revenue growth slowing from 1.8% in 2015 to 1.6% in 2016 as income from terrestrial broadcast advertising began to flatten. This trend is set to continue over the next five years with a projected CAGR of just 0.4% to 2021 for terrestrial broadcast advertising revenue. But this lack of growth will be compensated for by a rise in terrestrial online radio ad revenue over the same period at a projected 8.6% CAGR. As a result, total radio advertising revenue will reach US$18.9bn by 2021, with a projected 1.2% CAGR.

In 2016, public radio saw a boost as NPR programming attracted healthy numbers, particularly during the run-up to the presidential election. Listeners to NPR's news programs were up 26% in the morning and 43% in the afternoon compared with commercial radio counterparts, which saw 15% and 19% increases respectively.

Online ad revenue sees the most growth. Aside from NPR's non-profit-making model, the commercial radio industry in the US is based almost entirely on two major revenue streams: advertising and subscriptions.

As more consumers in the U.S. opt to use their digital devices, particularly smartphones, for their media consumption, listeners to online radio are forecast to increase accordingly. There were 257.6 million smartphone connections in the U.S. in 2016, a figure expected to reach 374.6 million by 2021.

As a result, traditional radio broadcasters continue to expand their content into the online space. In 2008 iHeartmedia launched its own radio-streaming offer that not only included broadcast radio over digital devices but also additional content like online channels tailored around specific artists, around families with young children, proprietary festivals and awards programmes. But the company's biggest move away from being a traditional radio broadcaster came in January, 2017, when it moved fully into the on-demand subscription music-streaming space with the launch of two new offerings-iHeartRadio Plus and iHeartRadio All Access.

Pandora is also gearing up for a move from personalised radio Internet provider to a fully fledged music-streaming service competing full-on with the likes of Spotify, Apple Radio, Amazon and iHeartRadio. By end-2016, Pandora is scheduled to introduce a $10 a month fully interactive on-demand subscription service with an improved catalogue of tracks, following on from licensing deals with Sony and Universal, and hopefully Warner Music as well.

Apple upped its on-demand music-streaming service in July, 2015, when it rolled out iTunes Radio as part of Apple Music. With a catalogue of some 27 million songs, the offering either came free with ads or ad-free at US$9.99 a month after a three month free trial.

Another feature beginning to play an important role in the online radio/music-streaming space is podcasting. While certain aspects of broadcast radio like news, weather and to a certain extent sports will always be time-sensitive, there are other categories of content that listeners will be happy to enjoy at their leisure. In the same way that Netflix and Amazon have helped to change audience viewing habits from a content-push to a content-pull experience, the same could happen for the listening audience as well.