Why aren’t media companies that own print or television outlets taking on radio as a transformational opportunity?
By definition, disruptive innovation is “an innovation that creates a new market and eventually disrupts an existing market and displaces established market leading firms, products, or alliances.”
Why would a non-radio media company invest the time and money, and take the risk to attempt to disrupt entrenched radio companies?
There are three good reasons:
- The rise of voice-powered devices.
- Consumer media consumption habits tilting heavily toward video and audio.
- The emergence of audiobooks and podcasts as platforms of choice for consumers.
Radio (and outdoor) have been incredibly resilient in the face of the digital disruption that has destroyed the market capitalisation of newspapers and magazines. And it doesn’t appear the appeal of radio is diminishing any time in the near future. Statista forecasts radio will grow from US$17.8 billion in 2016 to US$18.9 billion in 2021.
Voice-powered devices are now owned by 47.3 million Americans and 20% of U.S. households. Seventy-two percent of the smart speaker market belongs to Amazon and 18% by Google. Add to that the explosion of audiobooks and podcasts, and we start to get an idea of the market opportunity for “voice,” which has its origins in radio. Or said another way, the “audio” market.
Sales of books in an audio format were projected to grow 79,000 “copies” or 29% in 2017. Spending is projected to eclipse US$2.5 billion. Closely related to audiobooks are podcasts: 124 million Americans listened to at least one podcast last year, and 33% of those ages 25 to 54 listened to one podcast monthly.
The icing on the cake when determining market opportunity is “time spent listening.” According to Activate’s Tech and Media Outlook 2018, consumption of audio will amount to two hours and nine minutes daily.
Yet only a couple mainstream media companies are tapping into this change in media consumption behaviour. News Corp built its own podcast studio in the United Kingdom, and The Guardian has a section on its digital platform dedicated to podcasts.
The old axiom of media is “ad dollars follow eyeballs.” The axiom very well could be “ad dollars follow earlobes.”
Or as Walter Gretzky taught his son Wayne long before he became the greatest hockey player of all time: “Don’t skate to where the puck is but where it is going.”
This is an area that begs for disruptive innovation in media.