HD can happen – if Big Radio wants it to happen.

At least that’s my take after visiting the 2008 Consumer Electronics Show in Las Vegas.

I’ve been following the rollout of digital platforms for almost ten years now– from the time Europe started developing their various strategies through the days that NPR developed Tomorrow Radio, what today is called HD Radio.

While I’ve always been enamored with the concept, the rollout has repeatedly stubbed its collective toe.

Several issues have hurt badly. Among them, the HD Radio Alliance, which is something of a cartel of commercial broadcasters, made some initial poor decisions. First, in a direct nod to satellite radio (and to their own Achilles heel), they promised that there would be no commercials to start. This was hardly the incentive that GMs needed to get excited about HD prospects. No revenue, no investment. Second, they divvied up the formats so there would be no competition. Again, hardly incentive for any broadcast professional to actually innovate – no threat, no investment.

And then there are those commercials. Yes, they are confusing. But our own research and focus grouping do show increased awareness of something called HD Radio. It’s a start. However, far too many people, even those who have heard of it, have any idea of what it is.

Beyond all that, there were early receivers that weren’t ready for prime time from a performance or price standpoint. And there are the relatively weak signals that struggle when it comes to building penetration. And let’s not forget those who threw in the towel Day One on the premise that Wi-Fi in the car was just around the corner.

But despite the all these negatives, for the first time this year at the CES, I thought, “This thing just might happen.”

Reasons for Optimism

One of my early fears was that manufacturers simply wouldn’t get on board. Already, a manufacturer would need to produce something like five or six different radios just to cover the different FM bands around the globe. Adding a US-only HD platform might relegate it to a small tier of B-level niche manufacturers.

That’s not going to happen. From the looks of things at CES 2008, everybody’s in. Reportedly, even holdout Panasonic has cried uncle.

There are now more than a dozen tabletop models and more than a dozen aftermarket auto models available– and from big, blue-chip names like Sony, Denon, Alpine and JVC. This is a vast improvement over the past few years.

But if HD Radio is stuck in an automobile aftermarket world, it could spell doom.

The good news from CES is: Ford is in. Ford has announced that it will offer factory installed HD Radio standard or as an option in all 2010 Ford, Lincoln, and Mercury models. Those models hit dealerships next fall. (Ford currently offers dealer-installed HD options).

This was a major hurdle, and with Ford in, others will follow.

And then there’s Apple. The tech company has announced a project whereby songs played on multicasts can be tagged at the punch of a button and the information is stored on the docked iPod. Next time you connect your iPod to your computer, all tagged songs appear – ready for purchase.

Whether you like that feature or not, having Apple endorsing your effort can only be seen as a good thing. And by the way, the new JBL (Harman) iHD tabletop HD Radio with iPod dock was my “best in show.” I want one.

Lastly, the news that the US will not be an HD island is also encouraging. Brazil and The Philippines are in operation, with testing in Australia, New Zealand and many others. Europe has just formed an HD Radio Alliance.

Hurdles Remain

Parks Associates, a research company, forecasts 30 million adopters of HD radio within four years. That’s a big number.

To get there, HD will have to overcome a number of obstacles. First, there’s a whole lotta competition out there, including my new favorite device, the table-top Wi-Fi Radios. Any streaming radio station from anywhere in the world anywhere you can get Wi-Fi. Some of these new models absolutely kick butt.

Interestingly, there are no HD/Wi-Fi combo radios available. When I asked why not, a woman from a Taiwanese manufacturer said, “Why would you need it? Don’t all those stations already stream?” Hmm. Interesting answer. Today they might, but who knows if they will when SoundExchange starts exacting their pound of flesh for streaming rights on music (but that’s a whole other topic).

But the ‘Why would you need it?’ answer might mean something else – something that relates to my initial point above.

Why do I need an HD Radio now? After all, the programming, with the exception of some great stuff on the noncommercial dial, is largely pretty poor. The vast majority of HD programming is simply a bunch of automated jukeboxes – hardly incentive for the consumer to pick up a new radio when he or she can get all the automated jukeboxes in the world online. I mean, it’s bad enough that your main channel is becoming an automated jukebox…

This is not a chicken-or-the-egg question. We cannot wait until there are enough units sold to take the content piece seriously. If we pay any attention to the rollouts of digital overseas, we know that the programming must come first.

And right now commercial radio is poorly positioned to make it happen. With every nickel being treated as if it’s a manhole cover, it’s hard to see where genuine investment in product development will come from.

Solutions to that are the next entry…

Posted By:
Paul Marszalek
Managing Partner
Media Mechanics (a Multiplatform Production Company)