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Analyst: iBiquity's Growth Slower Than Expected
NEW YORK -- January 23, 2008: In a "Media Trends" report focusing on the Consumer Electronics Show, held earlier this month in Las Vegas, Barrington Research analyst Jim Goss spends a few paragraphs looking at HD Radio developer iBiquity Digital, which, he says, has "steadily, if slowly evolved toward a commercial business presence over the past half-dozen years."
Goss says the company has "developed more slowly than we might have expected," adding that "sluggish ad revenue trends in the radio industry have certainly not helped." But he notes that the radio industry "has put significant promotional effort behind advancement of the HD Radio concept."
But HD receiver sales have been disappointing, Goss says. "As 2007 began," he writes, "hopes were high that the number of HD Radios sold during the year would reach the 1 million mark. Our impression is that the actual unit sell-through was only about half that total." He says getting HD Radio in cars has been a "great challenge," since iBiquity isn't able to subsidize the process in the ways satellite radio has done.
BMW's decision to offer HD in its vehicles came first, but Goss says Ford's commitment was arguably the "bigger breakthrough" for the technology. "It seems reasonable to suspect that if one of the major automakers is successful in offering HD Radio as an attraction, other major vehicle makers will likely take notice as well," he writes.
Goss says iBiquity is getting $5-$6 per HD receiver sold and that its revenue potential has "significant upside." He goes on, "Importantly, from the standpoint of iBiquity's economic model, the radio ad revenue issue does not have to improve appreciably for iBiquity to do well. A stable environment might work well enough, since the important metric for iBiquity is radio units sold rather than ad revenue performance."
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