"We do not believe this to be a cyclical recession but one that is going to result in fundamental structural change"
The PWC Global Entertainment and Media Outlook predicts very difficult years to come for magazines and newspapers. The saturated markets of the EMEA region and North America are the hardest hit.
Publishing-lounge talked with Marcel Fenez, Global entertainment & media leader at PricewaterhouseCoopers about the forecast.
Your outlook focuses on a period with difficult economic conditions and pessimistic expectations for printed newspapers and magazines. In addition, the publishing industry undergoes a structural change. Looking at the decline for printed publications, how do you quantify the structural long-term trend versus the economic short-term effect in the period up to 2013?
Unfortunately – It is not as simple as that! The recession itself is accelerating the trend to digital as consumers are seeking better value in the content that they are willing to pay for. Once this has happened we do not believe that the consumer and by definition related advertising dollars will return from whence they had come. As such we do not believe this to be a cyclical recession but one that is going to result in fundamental structural change.
In your outlook, only one region – Latin America – sees an overall increase in spending up to 2013 for printed newspapers and magazines. What are the reasons for this special situation of Latin America?
While Latin America is the only region as a whole to show such a trend there are a number of examples of single countries that show such growth - for example India. Overall Latin America is still lagging behind other regions in terms of broadband infrastructure build and hence this results in print sustaining longer than in the other regions.
Both, newspapers and magazines, see difficult times ahead. But the trends differ somehow. Where do you see the main differences between the situations of both categories?
It all depends on consumer behaviour and how they react to a digital offering and how the newspapers (or newsbrands as I prefer to refer to them) react to that shift. Certain magazines of a niche nature, which build a strong social network around then will do well. The success of the newsbrands will depend on how they respond to disaggregating the exiting product to fit into a digital environment and what are the new associated revenue models.
Do you see a general pattern in changes of the distribution mix between single-copy sales and subscriptions in the years up to 2013?
We do not believe this to be a critical aspect of change in the next 5 years.
What do you recommend publishers of magazines in saturated markets in North America or Europe to do in this difficult period: To hold out or to use the time to move from print to on-line?
What is required is a thorough investigation of what the consumer wants, when they want it and how they want it. And finally what are the associated business models.
PWC Global Entertainment and Media Outlook 2009-2013:
www.pwc.com/extweb/home.nsf/docid/53DE83280330D6C4852575CA002A12C5
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