Digital Media Growth Projections - Updated 12/01/2005

As part of Bridge Ratings' on-going study of audience attrition of traditional radio and subscriber and user growth of alternative digital media, included here is an update to our findings first published in March of 2005.

While initial estimates showed solid growth for satellite radio during 2005, data updated through November 2005 indicates a more optimistic growth pattern. Presently our guidance indicates XM will reach just over 6 million in subscribers by year end - up significantly over 2004.

Sirius satellite radio has made tremendous strides during 2005. At the start of the year the satellite service registered 1 million subscribers. That number will climb to approximately 3 million at the close of 2005 for a total sector subscriber count of 9 million.

This growth coupled with improving program content and compelling personalities as well as strong marketing and discount campaigns are driving satellite subscriber projections beyond our original estimates. We graphed the results to see just where all this shakes out. You may be surprised. Digital Audio Market Projections.

The compiled data indicates that at this point in time, projected subscribers to satellite radio should reach over 50 million by 2010. We still see XM as retaining its 'senior' market share throughout the growth term.

Meanwhile, Internet radio streaming is already the source of preference among Americans for supplemental audio entertainment and it will continue its growth as more users are equipped with broadband technology.

Combine this data with the market penetration potential for wireless Internet and the picture becomes much clearer. And while the wireless solution for in-car Internet radio still needs to be determined, its potential for use by the public at large is far greater than the impressive growth projections being tossed about for satellite radio. The question that begs to be answered is: "As Internet radio use accelerates both in and out of home, will satellite radio's profitability model matter?"

The key here is this: with Internet radio already the preferred medium over satellite radio, traditional radio should continue to perfect and refine its product, keep an eye on the alternatives and not get distracted. In fact, it is clear now after a year-long study of digital media use by the "next generation", that traditional radio should further embrace as many of these technologies as possible to distribute their brands.

According to this updated data, Internet radio and its wireless distribution continues to represent the biggest challenge to traditional radio - not satellite radio.

All of the digital options offer more opportunity to siphon off listening to traditional radio. However, the future of AM/FM radio use hinges on the industry responding to the challenge by continuing to reinvent itself. HD radio may not be the answer to attrition that the industry hopes for. Too much is fluid and changing now to be confident we can be with these numbers for the immediate future.

The Internet radio solution will be aggregated in a portable device, much like an iPod or MP3 player with docking ports in your car and in every room in your home so it can be heard through car and home entertainment audio components.

Furthermore, the data supports recent Bridge Ratings interviews which indicate the future pervasiveness of audio streaming and audio downloading through mobile telephones. In fact, by 2010 we project the number of Americans streaming audio through mobile telephones will match or surpass those subscribing to Sirius Satellite Radio!


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