Chip manufacturer losses widen amid weaker DAB sales
British tech company Frontier Smart Technologies Ltd reported annual pre-tax losses widened as revenues fell by more than a fifth amid weaker digital radio (DAB) sales. For the year ended 31 December 2018, pre-tax losses widened to $3.3m from $2.1m a year earlier, and revenue fell 21% to $41.8m according to StockMarketWire.com. According to our analysis the global smartphone revolution will curb future demand for stand-alone radio sets.
The drop in revenue for the chip manufacturer was largely due to 'the completion of FM switch-off in Norway in 2017 and the subsequent inventory overhang, which together contributed to a decline in FY 2018 DAB radio volumes of one million units (US$11.1 million),' Frontier said.
DAB volumes were expected to return to 'modest growth, Frontier said. 'In the medium term (late 2019 through 2020) the prospects for radio are good with the planned phasing in of digital switch-over in Switzerland and receiver regulations coming into force in Italy and France'. (Source: StockMarketWire.com )
Analysis
Behind the losses for the DAB sector there is also a weakening European demand for stand-alone radio sets while smartphones are becoming a major and global listening platform for music and radio. Smartphones are not DAB-able in any market. There is also a paradigm shift coming up with on-line audio. Music and podcasting on joint platforms - as Spotify - is the New Radio.
Also there is no recorded consumer demand for DAB in any country. There are only five countries with a weekly listening share of more than 10%: (Norway, the United Kingdom, Denmark, Switzerland and Australia). In almost all countries in the world FM still is the major listening platform for radio.
It should be noted that Patrick Hannon, a Frontier vice president, works "with players across the radio ecosystem in order to develop the take-up of digital radio in key markets". In 2013, he was elected President of the lobby organisation WorldDAB which is a ”non-profit” set-up, apropos.
Frontier and other DAB stakeholders are now moving closer to the abyss.
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