1

DRM Consumer Receiveravailability and price

NASB Annual MeetingDRM USA Group10-11 May 2007

HCJB Global Technology CentreElkhart Indiana USA

Michel PennerouxChairman of the DRM Commercial Committee

Head of International Broadcasting – TDF - France

2

DRM Consumer receiver - Content

• The Receiver development process – Visibility– Strategic concerns

• How the DRM consortium maintains a pressure on the Receiver launch time line

• Actions and landmarks for the next 12 months

3

The DRM capable receiver development process

• Visibility– DRM receivers are here

» Sangean / Roberts» Morphy Richards» Himalaya» Others under development

– DSP» TI – RadioScape

– Sales» Direct sales» Internet sales (DW)

– Delay» The process has started in June 2003 » First step at IFA 2005» The making of a receiver is difficult» Secrecy is the rule, NDA» The receiver industry needs legal clearance by national

regulatory body on a country per country basis» Dates for the switch to digital is already schedules

which makes a pressure on all players– The advertisers look for more media– The ST announcement (IC, low cost receivers ahead)

4

The DRM capable receiver development process

• Strategic concerns under analysis at Receivers’ (1)

– Competition» Other technologies

. DMB

. iBoc

. ISDB-TBS» Telcos vs. broadcasting

. Convergence

. Universal terminal» Conservatism of present players reluctant to more

competition. Wait and see: any day

with out competition is more money

5

The DRM capable receiver development process

• Strategic concerns under analysis at Receivers’ (2)

– DRM alone or associated with other standards» DRM + any analogue AM & FM» DRM + DMB» DRM + iBoc» DRM30 & DRM+» DRM + etc.

6

The DRM capable receiver development process

• Strategic concerns under analysis at Receivers’ (3)

– Big numbers» 2.5 billions AM receivers worldwide (700 millions SW)» 540 millions of GSM subscribers in Europe» 2 billions GSM subscribers in the world» China Mobile: 316 m subscribers in March 07» 17 M customers for SFR in France» 145 millions of DAB/DMB receivers in 2012» 119 millions AM receivers in France on a total a 130

millions radios» 6 radios per household» 3 millions radios sold each year as replacement

(France)» The advertising business on a DRM station will start in

a France when 3 millions receivers sold» Advertising (media and out of media) money in the

world 700 billions Euros (145 Billions in the DRM launch countries, 29 in France, )

7

The DRM capable receiver development process

• Strategic concerns under analysis at Receivers’ (4)

– Big numbers

» An example: China Mobile

. 316 m subscribers in March 07

. Market value: $185 billion

. First buy outside China: $ 290 m in Pakistan (89%)

. 5 m new subscribers per month

. $ 11.70 average revenue per subscriber per month

8

The DRM capable receiver development process

• Strategic concerns under analysis at Receivers’ (5)

– Regulatory Body clearance process» Following the ITU-Rec 2003» Country per country basis» Green light given to marketing the product

– Switch from Analogue to Full Digital time schedule

» Between now and 2011in Europe» Demand for 3M receivers per market

9

The DRM capable receiver development process

All those strategic concerns come in addition to the product development scheme… Which make time flows

10

Retailer

Brandname

Brandnamenetwork

Purchaser

R & B

Manufacturer

Consumers DRM

Standard

Radio Receiver Software

IC

Commercial interface

Via Licensing

1

2

3

45

67

8

109

11

12

13

14

15

20

1617

19

18DRM National Platforms

11

The DRM capable receiver development process

• Then Communication Comes

– For what purpose?

» Inform the industry. Give opportunities. Start / Make business. Protect their investment. Positively contribute to the

Global Digital Economy

» Educate the consumers. Raise their interest in contents. Protect their buys

» Influence competition. Request for a quality solution

12

The DRM capable receiver development process

• Then Communication Comes

– We have decided to set priorities

» Protect the investors in DRM equipment. Open Standard. Totally accomplish the testing

process. Request tests with any competition. Positively contribute to the Global

Digital Economy

» Protect the cost effectiveness of the receiver. Volume. Think global. Protect the end user’s buy

» Protect our differences with competition. The DRM solution has differences

with any competitive system that must be clear to the public

13

The DRM capable receiver development process

• Then Communication Comes

– Partnership with DRM users

» Regulatory bodies. Standard an advantage. DRM is selling nothing, it is

simply exposing a quality technology and standard, not shareholder to compensate

. Joint testing process

. Open tests with any competition

. Positively contribute to the Global Digital Economy

» Advertisers. Final reception quality in AM

» Receiver Industry. Volume. Protect their buys

» Protect our differences with competition. The DRM solution has differences

with any competitive system that must be clear to the public

14

The DRM capable receiver development process

High respect is paid for anyone

spending 1 $ in DRM

for a long run service

15

The DRM capable receiver development process

•ST & FhG joint announcement

– DRM chipset– High quality RF front end (leveraged from products

made for other systems such as T-DAB, HD radio, S-DARS

– Low energy consumption– Opens the door to low cost receiver

•Other IC developments: NXP, ATMEL, TI, NERO, Analog Devices

•Millions of USD involved in IC production process

16

License Fees

17

License Fees

18

The DRM capable receiver development process

•First low cost receiver in Q1, 2008 (Q4, 2007 at best)

•Mass consumer in Q4, 2008– Cost < 50 USD– IC + RF at 15 USD (100 k units)– Retail 150 € max in Europe in 2008– Consumer brand names

19

DRM influence in the World

20

How the DRM consortium maintains a pressure on the Receiver launch time line

• DRM promo tours in China and India

• DRM members’ initiatives to secure the supply of receivers on time (Hangzhou and Chengdu in China)

• Endorsement by DRM members’ country Regulatory Bodies

– National DRM platforms (Germany, France, Spain, Italy, USA, Russia)

– Active actions in China, Korea, India, Brazil, Ecuador, Chile, Argentina, Bolivia, Colombia, Mexico, The Netherlands and UK

• Official dates for switching to Digital (2011 in Europe)

21

How DRM helps gaining confidence

DRM Stream Leaders Team

DRM National Team

Italy

Co-ordinator _________

Commercial Streams Stream Leaders

Contributors

Companies

International broadcasters tba National broadcasters public National broadcasters commercial

tba

Retailers Michel Penneroux Chip manufacturers

Manufacturing process

tba

New products / display and design

tba

Sales & distribution

tba

Rx manufacturers

Car Rx Wolfgang Schaefer Tx manufacturers Josef Troxler Car industry tba Radio Advertisers Michel Penneroux Domestic Regulatory Bodies tba Other tba

22

symposium00000023.jpgsymposium00000023.jpg

DRM In Hangzhou on May 2004

23

DRM in Chengdu in February 2006

24

• NewStar Chengdu

• Panovasic

• Nanshan Bridge

• Tonda Electronics

• IP Goal

• Golden Bridge

• GoldTel Microelectronics

• Nanjing Panda Electronics

• Jiangsu Hitcker

• China Huala Electronics

• Jingyunda Science & Technology Industry

DRM Active Manufacturers in China

25

Co-op Advertising

• Definition: A system by which ad costs are divided between two or more parties. Usually, such programs are offered by manufacturers to their wholesalers or retailers, as a means of encouraging those parties to advertise the product.

• In our case DRM member stations may offer airtime • Also Known As: Co-op Advertising, Co-op Program• 3 M DRM Rx sold means 35-40 M € worth of media

exposure• CPT on US TV: 36 USD (28€)

Receiver Distribution

26

Coop advertising plan

Broadcaster

RadioManufacturer

RLG

Brand/Importer

RetailerCar OEM

Con

sum

er

ModuleManufacturer

Pro

moti

on

Pla

n,

valu

e!

Pro

duct

launch

pla

n

Digital Radio PromotionDigital Content promotionReceiver promotionOn LEGACY Broadcast network

Moti

vati

on

Alig

nm

ent

Mot

ivat

eAl

ignm

ent

P.O P.O. P.O. P.O.

chip chippromote

chippromote

chip

Co-ordinate

7654

3

2144

7

Motivate

alignmentthe CC coordinates the plan

7

2

P.O: Product Order

27

DRM Service launches: Deutschlandradio

• Deutschlandfunk

• Medium-wave 855kHz (day-time)

• 10kW DRM

28

DRM Service launches: Deutschlandradio

• Kulture channel

• 177kHz Long-wave

• 150kW DRM

29

DRM Service launches: RTL

French

• 5990kHz HF– 50kW

30

DRM Service launches: RTL

German

• 6095kHz HF– 50kW

• 1440kHz MF– 240kW – day– night

31

DRM Service launches: Deutsche Welle

German/English

• Multiple HF transmissions– 9690kHz– 6130kHz– 7265kHz– 15440kHz– 6140kHz– 6180kHz– 13790kHz– 3995kHz– 7515kHz

32

BBC World Service on DRM

– Core coverage from VTC 1296kHz DRM Tx at Orfordness

– “English for Europe”– Augmented by SW

from UK and Norway– expanding to

France/Germany

33

MSY

34

35

Action plan and landmarks for the next 12 months

• The following actions are conducted in parallel to that of major players who do not share their plans with us for commercial reasons

• Mid May meeting of the US DRM platform

• End of May meeting between a leader in the IC business a leading laboratory and a leader in the receiver industry to design a new DRM Rx

• Next June a team of DRM members will visit China (Chengdu and Nanjin) for meeting with the five radio manufacturers who has signed LoI for producing DRM receivers below 50 USD

– Secure the supply of first batch of low cost DRM receivers to customers before the end of 2007

• Late June meeting of the French DRM platform on which European retail networks contribute (same in Germany, Spain and Italy

• July: call for proposal for DRM services in France for airing by January 2008. Need for DRM receivers by then (3M per year).

36

DRM receivers

• You are also concerned because– Radio is your business– Telcos threatens your industry– Radio is alive – Advertisers need more of your airtime ( a signal to

financial backers)– DRM is available now so use it now (budget 2008)

• I count on you to– Join our consortium– Grow the DRM USA group– Dedicate more resources to your DRM commitment– Contribute to our coop advertising plan (operational

details on request)– Consider buying some receivers to make the ball roll– Make your station success in the coming years with DRM

37

DRM Consumer receiver

Thank you

michel.penneroux@tdf.fr

www.drm.org