, the UK consumer electronics company, was demonstrating its Tip and Tilt Internet Radio at NAB, having introduced it earlier this year at CES. The product features a neat and simple cube design, wifi connectivity, runs on a rechargeable lithium ion battery, and will be available in a range of bright colours when it launches this summer. It can be programmed from a PC to play any four internet radio stations, and these are selected by moving the cube around four of its sides. The remaining two sides – top and bottom – are used to tilt the volume up or down. The device will retail at $99 and £70 and is aimed at expanding the market for internet radio to less technophile segments.
Armour was hoping to catch the eye of broadcasters, not just with the Tip and Tilt’s innovative design, but with its potential to lock listeners in to particular radio stations, which the software allows. Broadcasters might be persuaded to subsidise the device if it could only be used to listen to their stations, locking out competitors and increasing their share of the advertising pie.
There are several difficulties with this argument. In particular, there must be doubts whether radio listeners would be happy to be prevented from selecting any station they choose. The counter-argument is that restricted content access, a model familiar to other sectors, such as games consoles and pay TV. Our feeling is that if a major station group, such as Global Radio in the UK, subsidised the device to such an extent that it became very low cost, or even free, demand could be sizeable.
But the economics would be challenging, even if the broadcast industry was not recovering from a deep advertising recession. We suspect that in high volume the device could be manufactured for $30-40. But a major broadcaster might buy, say, 100,000 units at a cost of $3-4m, and that is not a trivial investment for an industry struggling in challenging times. And would that type of volume really make much impact on advertising ratings? Given Global Radio’s weekly reach, as an example, of more than 18 million listeners, it seems rather doubtful.
So we conclude that the Tip and Tilt will likely need to focus on the retail opportunity, and it may find many willing buyers at its low price point. Internet radio is something which has been waiting to break out of its PC prison for many years and this sort of innovation is what is needed to help accelerate that trend.
Client Reading: Global Audiovisual Market Forecast