FICCI-KPMG-Report-13-FRAMES

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52 The power of a billion: Realizing the Indian dream Digital platforms yet to have any significant impact Globally, the print industry has witnessed a decline in its subscription and advertising revenues due to the steady shift of consumers towards new media platforms such as the internet and mobile. To be more competitive, companies have maintained low newspaper cover prices (with some exceptions) and focused on differentiating by providing high quality, analytical content to the consumers. However, bankruptcies have continued unabated. Rocky Mountain News, Cincinnati Post, Halifax Daily News and Tucson Citizen are some of the newspaper companies that have filed for bankruptcy in the last few years. Amidst the gloom, some publications have been able to monetise content on the digital platforms. While a few leading business dailies such as The Wall Street Journal and the Financial Times have been behind the pay walls for some time now, the global print industry is witnessing general newspapers also establishing similar pay models. For instance, The New York Times introduced its paid subscription services by signing up 100,000 digital subscribers in the first month and has grown to 450,000 paid subscribers in a year’s time. As a result, for the first time, The New York Times’ circulation revenues surpassed its advertisement revenues. However, not all dailies are able to master the digital game. The ability to attract online readers to pay for content will be the key differentiating factor 23 . The winners will be those who can create value for their content and facilitate on-demand aggregation far more efficiently than they have done till date. Online newspaper reading behaviour Percent of users Behaviour USA Brazil Germany Russia France India Ever visit a paper site 66.9% 39.1% 43.2% 33.0% 43.5% 35.4% Visit a paper site daily 17.1 8.5 11.7 7.4 11.6 9.9 Percent of pages viewed per visitor 1.1 0.6 1.9 0.5 1.6 2.1 Source: WAN-IFRA/ComScore, November 2012; In the US, for example, 67% of people who ever use the Internet, visit newspaper sites. But only 17% of daily web users turn to their newspaper site daily. © 2013 KPMG, an Indian Registered Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. In marked contrast to the global trends, the Indian print industry is growing with steady increase in both advertising and circulation revenues. Although, internet broadband penetration has been increasing at an enormous pace, current penetration levels are too low to pose a significant threat to the industry. Online reading behaviour indicates that only 35.4 percent of the Indians who ever use the internet, visit newspaper websites and only 9.9 percent of daily web users turn to their newspaper website daily. This is substantially low when compared to countries such as USA and France. Although several print media houses have moved to online channels, they are usually slow to adapt or monetise their content effectively. Success cases are few and far between. For instance, HT Media’s digital segment witnessed an 18 percent increase in revenues from its digital segment to INR 138 million from INR 117 million in Q3FY13 as compared to Q3FY12. HT Mobile registered a 40 percent growth over Q3 FY12. The company has also registered revenue growth of 30 percent over Q3 FY12 on both HTCampus.com and Shine.com 24 . The Times Internet Limited (part of The Times group) has built 24 properties across various categories such as online news, eCommerce, music, video, and communities and achieved a base of 30 million plus monthly visitors 25 . 23. http://wire.kapitall.com/investment-idea/newspaper-industry-renewed-hope/ 24. HT Media, Company Website 25. Company website Content is getting digitised and becoming platform agnostic, while also becoming available in audio and video formats. Due to technological advancements and growing user needs, content today is highly interactive, easily distributable to its users at low cost and is real time. However, monetising digitised content online is another industry challenge. “ Industry will witness the shift of tactical advertisement from print to ecommerce platform, but for brand advertisement print will remain the preferred choice of an advertiser. “ - Sunil Mutreja Executive Director, Amar Ujala Publications Ltd
The power of a billion: Realizing the Indian dream 53 For advertisers, access to mass markets remains the key, leading print players with an established reader base will always be high on the spending plans of advertisers. The overall shift of readers from print to online will continue and will get to critical mass at some point in India’s future. So print players must continue to develop innovative advertising packages combining both print and online to secure the advertising spend for their brands. Activation business adding an innovative flavour to the print medium Brand activation is now an important part of any brand building exercises and print players have been tapping this opportunity by providing integrated solutions to media planners. Due to its local nature, compared to a national medium like television, print players have been able to provide customised solutions to advertisers. The industry is providing activation solutions to brands for promotions, brand/product launches, brand awareness campaigns, consumer fairs, exhibitions and other mega social events. Most of the players have invested in developing their activation divisions 26 . The activation segment in the print is driven by development of award properties and rural properties. Our industry discussions indicate that while marketers plan to increase the proportion of their belowthe-line spends in 2013, the growth will be driven by activities which are targeted towards rural audiences. The organised portion of this industry is poised to increase as advertisers’ increase their below-the-line spends over the next two years, build communities and amplify the customer experiences. Cost rationalisation Due to challenges and the slowdown faced by print companies in India, companies have already been focusing on cost reductions across all functional areas for some time. The economic downturn has, however, led to still tougher measures. Some publishers are looking to increase efficiency by outsourcing part or all of their production process and finding ways to collaborate with others, implementing strong inventory management processes to reduce the newsprint carrying cost and designing a leaner organisation structure to reduce manpower cost. “ Print industry will have to be innovative to design customised and integrated ad solutions to create value for advertisers, along with continuously tightening the grips on operational costs. 26. Industry discussions conducted by KPMG in India 27. Netscribes report – Online and offline classified market in India “ - DD Purkayastha Group CEO, Anand Bazaar Patrika Online and offline classifieds business continue to co-exist but balance tilting towards online Overall classified market in India is driven by growth in the service sector, favourable demographics and growth in the advertising industry. Print classifieds constitute 59 percent of the overall classifieds industry 27 . Challenges faced by the online classified business- language barrier, lower penetration of the internet and online payment mechanism, are saving the offline classifieds for the time being. With increasing penetration of internet, the offline classified business is expected to cede its majority share to the online space. Online and offline classified business Source: Netscribes report – online and offline classified market in India Print players have been quick to assess the above trend of declining offline classified business and to compensate for the loss of revenue, had started their online classified businesss well in advance. For example, Bennett Coleman & Co. Ltd has established a strong presence in the three of the most dominant online classifieds categories - matrimonial, jobs and real estate. Newsprint prices anticipated to be stable but rupee depreciation still a risk Newsprint typically accounts for 40 to 50 percent of a publisher’s cost base. The total newsprint demand in India was 2.1 million MT in FY 2012. Of this, approximately 1 million MT of newsprint was produced and procured locally, while 1.1 million MT (approximately 50 percent of total demand) was imported from international newsprint producers. Break-up of domestic and imported newsprint consumption Source: Centre for Industrial and Economic Research Industry statistic © 2013 KPMG, an Indian Registered Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
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FICCI 2013 143 “ The Amendments t
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11 Technology The power of a billio
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Acknowledgement We acknowledge the
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FICCI-KPMG-Report-13-FRAMES

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